foreclose a subsequent finding to the contrary depending
4. Alleging capacity to sue or be sued
section 4, Rule 8
Section 4. Capacity. — Facts showing the capacity of a party
to sue or be sued or the authority of a party to sue or be sued
in a representative capacity or the legal existence of an
organized association of person that is made a party, must be
averred. A party desiring to raise an issue as to the legal
existence of any party or the capacity of any party to sue or be
sued in a representative capacity, shall do so by specific
denial, which shall include such supporting particulars as are
peculiarly within the pleader's knowledge. (4)
section 16(d), Rule 16
Section 1. Grounds. — Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion
to dismiss may be made on any of the following grounds:
(d) That the plaintiff has no legal capacity to sue;
French Oil v. CA, 295 S 462 (1998)
- Ludo and Luym Oleochemical, Co. filed a complaint for
breach of contract with damages against French Oil and
its alleged Philippine agent Trans-World Trading
Company
o French Oil Mill Machinery is a corporation with
principal office at Piqua, Ohio, USA
- Summons was served on Trans-World which moved to
dismiss the complaint arguing that it is not petitioner’s
agent.
- French Oil itself filed a special appearance with MTD
contending that the court had no jurisdiction over its
person due to improper service of summons. It argued
that:
o it is not doing business in the Philippines
o Trans-World is not its agent
- RTC dismissed the complaint for lack of jurisdiction over
petitioner
- Upon MR, RTC reversed the order of dismissal and ruled
that summons was properly served on petitioner whom it
found doing business in the Philippines and Trans-World
as its agent
- CA affirmed RTC: summons properly served
- Before the SC, French Oil contends that it is not doing
business in the Philippines and that Trans-World is not its
agent, and thus, the summons served on the latter has no
effect on the former
HELD: CA affirmed
- It is not enough to merely allege in the complaint that a
defendant foreign corporation is doing business. For
purposes of the rule on summons, the fact of doing
business must first be “established by appropriate
allegations in the complaint” and the court in determining
such fact need not go beyond the allegations therein
- ITC: the ff. allegations are sufficient that petitioner is doing
business for purposes of Section 14, Rule 14
o allegations that petitioner entered into a contract
with private respondent to supply and install
various machineries and equipments for the use
of the latter’s oil mill factory
o that the first shipment of machineries from
petitioner was received by private respondent
- The determination that a foreign corporation is doing
business is merely tentative and only to enable the local
court to acquire jurisdiction over the person of the foreign
corporation through service of summons. It does not
on the evidence
- Under the Rules of Court, if the defendant is a foreign
corporation doing business in the Philippines, summons
may be served on
(a) its resident agent designated in accordance with law;
(b) if there is no resident agent, the government official
designated by law to that effect; or
(c) any of its officer or agent within the Philippines.
- Private respondent alleged in its complaint that Trans-
World is petitioner’s agent, so that the service was made
on the latter.
o Such general allegation is insufficient to show
the agency relationship between petitioner and
Trans-World.
o However, although there is no requirement to
first substantiate the allegation of agency yet it is
necessary that there must be specific allegations
in the complaint that establishes the connection
between the principal foreign corporation and its
alleged agent with respect to the transaction in
question.
- For purposes of the rules on summons, the determination
of principal-agent relationship from the allegations in the
complaint is only preliminary and is not even conclusive
as to liability. Nothing bars the court from later making a
different finding after the parties had substantiated their
respective allegations with respect to agency should the
same be disputed.
- As found by both courts below, petitioner treated Trans-
World as its Philippine agent in the assailed transaction.
Such factual assessment is binding on this Court and will
not be disturbed as no exceptional circumstances nor
cogent reasons were shown to justify its reversal
- the filing of an answer per se should not be automatically
treated as voluntary appearance by the defendant for
purposes of summons. It should be noted that when the
appearance of a defendant is precisely to object to the
jurisdiction of the court over his person, it cannot be
considered as appearance in court
5. Alleging compliance with conditions precedent
Rule 8 Section 3
Conditions precedent. — In any pleading a general
averment of the performance or occurrence of all
conditions precedent shall be sufficient. (3)
Rule 16 Section 16 (J)
Grounds. — Within the time for but before filing the
answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the
following grounds:
(j) That a condition precedent for filing the claim
has not been complied with. (1a)
Art. 151, Family Code.
“No suit between members of the same family shall
prosper unless it should appear from the verified
complaint or petition that earnest efforts toward a
compromise have been made, but that the same have
failed. It if is shown that no such efforts were in fact
made, the case must be dismissed.”
Section 408 LGC
Subject Matter for Amicable Settlement; Exception
Thereto. - The lupon of each barangay shall have
authority to bring together the parties actually residing
in the same city or municipality for amicable
settlement of all disputes except:
(a) Where one party is the government, or any
subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee,
and the dispute relates to the performance of his
official functions;
(c) Offenses punishable by imprisonment exceeding
one (1) year or a fine exceeding Five thousand pesos
(P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located
in different cities or municipalities unless the parties
thereto agree to submit their differences to amicable
settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in
barangays of different cities or municipalities, except
where such barangay units adjoin each other and the
parties thereto agree to submit their differences to
amicable settlement by an appropriate lupon;
(g) Such other classes of disputes which the
President may determine in the interest of Justice or
upon the recommendation of the Secretary of Justice.
The court in which non-criminal cases not falling
within the authority of the lupon under this Code are
filed may, at any time before trial motu propio refer
the case to the lupon concerned for amicable
settlement.
Section 409 LGC
Venue. -
(a) Disputes between persons actually residing in the
same barangay shall be brought for amicable
settlement before the lupon of said barangay.
(b) Those involving actual residents of different
barangays within the same city or municipality shall
be brought in the barangay where the respondent or
any of the respondents actually resides, at the
election of the complaint.
(c) All disputes involving real property or any interest
therein shall be brought in the barangay where the
real property or the larger portion thereof is situated.
(d) Those arising at the workplace where the
contending parties are employed or at the institution
where such parties are enrolled for study, shall be
brought in the barangay where such workplace or
institution is located.
Objections to venue shall be raised in the mediation
proceedings before the punong barangay; otherwise,
the same shall be deemed waived. Any legal question
which may confront the punong barangay in resolving
objections to venue herein referred to may be
submitted to the Secretary of Justice, or his duly
designated representative, whose ruling thereon shall
be binding.
Article 2035 NCC
No compromise upon the following questions shall be
valid:
(1) The civil status of persons;
(2) The validity of a marriage or a legal separation;
(3) Any ground for legal separation;
(4) Future support;
(5) The jurisdiction of courts;
(6) Future legitime.
Heirs of Favis v Gonzales
FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to
Capitolina Aguilar (Capitolina) with whom he had seven
children. When Capitolina died in March 1994. Dr. Favis
married Juana Gonzalez (Juana), his common-law wife with
whom he sired one child, Mariano G. Favis (Mariano), he
executed an affidavit acknowledging Mariano as one of his
legitimate children. Mariano is married to Larcelita D. Favis
(Larcelita), with whom he has four children.
Dr. Favis died intestate on July 29, 1995. On October 16, 1994,
prior his death, he allegedly executed a Deed of Donation
transferring and conveying properties in favor of his
grandchildren with Juana. Claiming the said donation
prejudiced their legitime, Dr. Favis children with Capitolina,
petitioners herein, filed an action for annulment of the Deed of
Donation, inventory, liquidation, liquidation and partition of
property before the RTC against Juana, Sps. Mariano and
Larcelita and their grandchildren as respondents.
RTC nullified the Deed of Donation. The trial court found that
Dr. Favis, at the age of 92 and plagued with illnesses, could
not have had full control of his mental capacities to execute a
valid Deed of Donation.
The Court of Appeals ordered the dismissal of the petitioners
nullification case. The CA motu proprioproprio ordered the
dismissal of the complaint for failure of petitioners to make an
averment that earnest efforts toward a compromise have been
made, as mandated by Article 151 of the Family Court.
ISSUE:
May the appellate court dismiss the order of dismissal of the
complaint for failure to allege therein that earnest efforts
towards a compromise have been made?
HELD: The appellate court committed egregious error in
dismissing the complaint.
The appellate court committed egregious error in dismissing
the complaint. The appellate courts decision hinged on Article
151 of the Family Code, Art.151.No suit between members of
the same family shall prosper unless it should appear from the
verified complaint or petition that earnest efforts toward a
compromise have been made, but that the same have failed. If
it is shown that no such efforts were in fact made, the case
must be dismissed.
The appellate court correlated this provision with Section 1, par.
(j), Rule 16 of the 1997 Rules of Civil Procedure, which
provides: Section 1. Grounds. - Within the time for but before
filing the answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the following
grounds:(j) That a condition precedent for filing the claim has
not been complied with.
The appellate courts reliance on this provision is misplaced.
Rule 16 treats of the grounds for a motion to dismiss the
complaint. It must be distinguished from the grounds provided
under Section 1, Rule 9 which specifically deals with dismissal
of the claim by the court motu proprio. Section 1, Rule 9 of the
1997 Rules of Civil Procedure. Section 1, Rule 9 provides for
only four instances when the court may motu proprio dismiss
the claim, namely: (a) lack of jurisdiction over the subject
matter; (b) litis pendentia; (c) res judicata; and (d) prescription
of action.
It was in Heirs of Domingo Valientes v. Ramas cited in P.L. Uy
Realty Corporation v. ALS Management and Development
Corporation where we noted that the second sentence of
Section 1 of Rule 9 does not only supply exceptions to the rule
that defenses not pleaded either in a motion to dismiss or in
the answer are deemed waived, it also allows courts to dismiss
cases motu proprio on any of the enumerated grounds. The
tenor of the second sentence of the Rule is that the allowance
of a motu propio dismissal can proceed only from the
exemption from the rule on waiver; which is but logical
because there can be no ruling on a waived ground.
A failure to allege earnest but failed efforts at a compromise in
a complaint among members of the same family, is not a
jurisdictional defect but merely a defect in the statement of a
cause of action.
In the case at hand, the proceedings before the trial court ran
the full course. The complaint of petitioners was answered by
respondents without a prior motion to dismiss having been filed.
The decision in favor of the petitioners was appealed by
respondents on the basis of the alleged error in the ruling on
the merits, no mention having been made about any defect in
the statement of a cause of action. In other words, no motion to
dismiss the complaint based on the failure to comply with a
condition precedent was filed in the trial court; neither was
such failure assigned as error in the appeal that respondent
brought before the Court of Appeals.
Therefore, the rule on deemed waiver of the non-jurisdictional
defense or objection is wholly applicable to respondent. If the
respondents as parties-defendants could not, and did not, after
filing their answer to petitioners complaint, invoke the objection
of absence of the required allegation on earnest efforts at a
compromise, the appellate court unquestionably did not have
any authority or basis to motu propio order the dismissal of
petitioners complaint.
The correctness of the finding was not touched by the Court of
Appeals. The respondents opted to rely only on what the
appellate court considered, erroneously though, was a
procedural infirmity. The trial court's factual finding, therefore,
stands unreversed; and respondents did not provide us with
any argument to have it reversed.
The decision of the Court of Appeals is reversed and set aside
and the Judgment of the Regional Trial Court is AFFIRMED.
Gayon v Gayon
Facts:
In 1967, Pedro Gayon is the brother of Silvestre Gayon whose
wife is Genoveva Gayon. Pedro filed a case against against
Silvetre and Genoveva for consolidation of ownership.
Genoveva alleged that her husband, Silvestre, died long
before the institution of this case. She prayed that for the
dismissal of the case because Pedro, being a brother of the
deceased Silvestre, "did not exert efforts for the amicable
settlement of the case" before filing his complaint.
Issue:
Is there a need for an earnest effort toward a compromise in
this case?
Held:
Art. 222 of the Civil Code provides:
No suit shall be filed or maintained between members of the
same family unless it should appear that earnest efforts toward
a compromise have been made, but that the same have failed,
subject to the limitations in article 2035.
This phrase, "members of the same family," should, however,
be construed in the light of Art. 217 of the same Code,
pursuant to which:
Family relations shall include those:
(1) Between husband and wife;
(2) Between parent and child;
(3) Among other ascendants and their descendants;
(4) Among brothers and sisters.
Genoveva is plaintiff's sister-in-law. "Sisters-in-law" are not
listed under Art. 217 of the New Civil Code as members of the
same family. Hence, the case does not come within the
purview of Art. 222, and plaintiff's failure to seek a compromise
before filing the complaint does not bar the same.
Hontiveros v RTC
SUMMARY: Sps Augusto and Maria Hontiveros filed a
complaint for damages against Gregorio Hontiveros and
Teodoro Ayson. Respondents claim that case states no cause
of action for failure to allege that earnest efforts towards a
compromise had been made, considering that plaintiff Augusto
and respondent Gregorio are brothers. Plaintiffs filed an
Amended Complaint with the said allegation, which was denied
by respondents. RTC ruled that failure to verify as to the
earnest efforts made and the failure of the same, as required
under Art 151 of the Family Code, is ground for dismissal of
case. Court held that failure to comply with Art. 151 is not a
jurisdictional defect. What the Court should have done is to
order plaintiffs to verify it, and not to dismiss. Also, Art. 151
does not apply because of the inclusion of “strangers” namely,
Maria Hontiveros and Teodora Ayson, which takes it out of the
ambit of Art. 151.
FACTS:
• Sps Augusto and Maria Hontiveros filed a complaint for
damages against Gregorio Hontiveros and Teodora Ayson.
Augusto and Gregorio, both surnamed Hontiveros, were
brothers.
• Plaintiffs alleged that they are the owners of land in Capiz,
pursuant to a decision by the IAC in a land registration case
filed by Gregorio. They claim have been deprived of income
from the land as a result of the filing of the case, consisting of
rentals from tenants, and that they were in bad faith.
• Gregorio and Ayson prayed for dismissal of the case. As
counterclaim, they claimed damages and reconveyance of the
land.
o They denied that they were married. Gregorio claimed to be
a widower, while Ayson single. Denied that they deprived
petitioners of possession and that property had already been
returned by virtue of writ of possession. They also claimed that
complaint failed to state a cause of action since it did not allege
that earnest efforts towards a compromise had been made,
considering that Augusto and Gregorio were brothers. Ayson
claimed that she had nothing to do with the case as she was
not even married to Gregorio and did not have any proprietary
interest in the property.
• Petitioners filed an Amended Complaint to insert therein an
allegation that “earnest efforts towards a compromise have
been made between the parties but the same were
unsuccessful.”
o Private respondents filed Answer to Amended Complaint w/
Counterclaim in which they denied that earnest efforts have
been made to reach a compromise but were unsuccessful.
• Petitioners moved for a judgment on the pleadings on the
ground that private respondents’ answer did not tender an
issue or that it otherwise admitted the material allegations of
the complaint.
o Private respondents opposed motion alleging that they had
denied the claims and thus tendered issues of fact to be
resolved after trial.
• RTC denied Motion for Judgment on Pleadings, but
dismissed main case because it was not verified as required
under Art. 151 of the Family Code, and thus, it did not believe
that earnest efforts had been made to arrive at a compromise.
• Claiming that case involved pure questions of law, they
elevated case to SC.
ISSUE: WoN judgment on the pleadings may be had? NO.
HELD: Under the rules, if there is no controverted matter in the
case after the answer is filed, the trial court has the discretion
to grant a motion for judgment on the pleadings filed by a Party.
Where there are actual issues raised in the answer, such as
one involving damages, which require the presentation of
evidence and assessment thereof by the trial court, it is
improper for the judge to render judgment based on the
pleadings alone. In this case, aside from the amount of
damages, the following factual issues have to be resolved,
namely, (1) Teodora Ayson's participation and/or liability, if any,
to petitioners and (2) the nature, extent, and duration of private
respondents' possession of the subject property.
ISSUE: WoN case must be dismissed for failure to comply with
verification requirement under Art. 151, FC? NO.
HELD: The absence of the verification required in Art. 151
does not affect the jurisdiction of the court over the subject
matter of the complaint. The verification is merely a formal
requirement intended to secure an assurance that matters
which are alleged are true and correct. If the court doubted the
veracity of the allegations regarding efforts made to settle the
case among members of the same family, it could simply have
ordered petitioners to verify them.
• Otherwise, mere suspicion or doubt on the part of the trial
court as to the truth of the allegation that earnest efforts had
been made toward a compromise but the parties' efforts
proved unsuccessful is not a ground for the dismissal of an
action. Only if it is later shown that such efforts had not really
been exerted would the court be justified in dismissing the
action.
• Moreover, as petitioners contend, Art. 151 of the Family Code
does not apply in this case since the suit is not exclusively
among family members. The inclusion of private respondent
Ayson as defendant and petitioner Maria Hontiveros as plaintiff
takes the case out of the ambit of Art. 151 of the Family Code.
Under this provision, the phrase "members of the same family"
refers to the husband and wife, parents and children,
ascendants and descendants, and brothers and sisters,
whether full or half-blood.
• Religious relationship and relationship by affinity are not
given any legal effect in this jurisdiction. Consequently, private
respondent Ayson, who is described in the complaint as the
spouse of respondent Hontiveros, and petitioner Maria
Hontiveros, who is admittedly the spouse of petitioner Augusto
Hontiveros, are considered strangers to the Hontiveros family,
for purposes of Art. 151.
ISSUE: WoN Art 151 is unconstitutional? Not proper case to
decide this issue because it’s not lis mota.
• Petitioners finally question the constitutionality of Art. 151 of
the Family Code on the ground that it in effect amends the
Rules of Court. This, according to them, cannot be done since
the Constitution reserves in favor of the Supreme Court the
power to promulgate rules of pleadings and procedure.
Considering the conclusion we have reached in this case,
however, it is unnecessary for present purposes to pass upon
this question. Courts do not pass upon constitutional questions
unless they are the very lis mota of the case.
PETITION GRANTED. RTC DECISION SET ASIDE. CASE
REMANDED TO RTC FOR FURTHER PROCEEDINGS.
6. Striking out
Section 12, Rule 8
Striking out of pleading or matter contained therein. — Upon
motion made by a party before responding to a pleading or, if
no responsive pleading is permitted by these Rules, upon
motion made by a party within twenty (20) days after the
service of the pleading upon him, or upon the court's own
initiative at any time, the court may order any pleading to be
stricken out or that any sham or false, redundant, immaterial,
impertinent, or scandalous matter be stricken out therefrom.
B. Answer
1. General
Section 4, Rule 6
Answer. — An answer is a pleading in which a
defending party sets forth his defenses.
Section 1, Rule 11
Answer to the complaint. — The defendant shall file
his answer to the complaint within fifteen (15) days
after service of summons, unless a different period is
fixed by the court.
Section 2, Rule 11
Answer of a defendant foreign private juridical entity.
— Where the defendant is a foreign private juridical
entity and service of summons is made on the
government official designated by law to receive the
same, the answer shall be filed within thirty (30) days
after receipt of summons by such entity
. The affirmative defenses include fraud, statute of
Section 11, Rule 11
Extension of time to plead. — Upon motion and on
such terms as may be just, the court may extend the
time to plead provided in these Rules.
Rule 22
Section 1. How to compute time. — In
computing any period of time prescribed or allowed by
these Rules, or by order of the court, or by any
applicable statute, the day of the act or event from
which the designated period of time begins to run is to
be excluded and the date of performance included. If
the last day of the period, as thus computed, falls on a
Saturday a Sunday, or a legal holiday in the place
where the court sits, the time shall not run until the
next working day. (a)
Section 2. Effect of interruption. — Should an
act be done which effectively interrupts the running of
the period, the allowable period after such interruption
shall start to run on the day after notice of the
cessation of the cause thereof.
The day of the act that caused the interruption shall
be excluded in the computation of the period. (n)
Section 11, RSC
Response - The defendant shall file with the court and
serve on the plaintiff a duly accomplished and verified
Response within a non - extendible period of ten (10)
days from receipt of summons. The Response shall
be accompanied by certified photocopies of
documents, as well as affidavits of witnesses and
other evidence in support thereof. No evidence shall
be allowed during the hearing which was not attached
to or submitted together with the Response, unless
good cause is shown for the admission of additional
evidence.
Section 5, RSP
Answer. — Within ten (10) days from service of
summons, the defendant shall file his answer to the
complaint and serve a copy thereof on the plaintiff.
Affirmative and negative defenses not pleaded therein
shall be deemed waived, except for lack of jurisdiction
over the subject matter. Cross-claims and compulsory
counterclaims not asserted in the answer shall be
considered barred. The answer to counterclaims or
cross-claims shall be filed and served within ten (10)
days from service of the answer in which they are
pleaded.chanroble
2. Alleging defenses
Section 5, Rule 6
Defenses. — Defenses may either be negative or
affirmative.
(a) A negative defense is the specific denial of
the material fact or facts alleged in the pleading of the
claimant essential to his cause or causes of action.
(b) An affirmative defense is an allegation of a
new matter which, while hypothetically admitting the
material allegations in the pleading of the claimant,
would nevertheless prevent or bar recovery by him.
limitations, release, payment, illegality, statute of
frauds, estoppel, former recovery, discharge in
bankruptcy, and any other matter by way of
confession and avoidance. (5a)
Section 2, Rule 8
Alternative causes of action or defenses. — A party
may set forth two or more statements of a claim or
defense alternatively or hypothetically, either in one
cause of action or defense or in separate causes of
action or defenses. When two or more statements are
made in the alternative and one of them if made
independently would be sufficient, the pleading is not
made insufficient by the insufficiency of one or more
of the alternative statements.
Section 7, Rule 8
Action or defense based on document. — Whenever
an action or defense is based upon a written
instrument or document, the substance of such
instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be
deemed to be a part of the pleading, or said copy may
with like effect be set forth in the pleading.
Section 8, Rule 8
How to contest such documents. — When an action
or defense is founded upon a written instrument,
copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness
and due execution of the instrument shall be deemed
admitted unless the adverse party, under oath
specifically denies them, and sets forth what he
claims to be the facts, but the requirement of an oath
does not apply when the adverse party does not
appear to be a party to the instrument or when
compliance with an order for an inspection of the
original instrument is refused.
Section 10, Rule 8
Specific denial. — A defendant must specify each
material allegation of fact the truth of which he does
not admit and, whenever practicable, shall set forth
the substance of the matters upon which he relies to
support his denial. Where a defendant desires to deny
only a part of an averment, he shall specify so much
of it as is true and material and shall deny only the
remainder. Where a defendant is without knowledge
or information sufficient to form a belief as to the truth
of a material averment made to the complaint, he
shall so state, and this shall have the effect of a
denial.
Section 11, Rule 8
Allegations not specifically denied deemed admitted.
— Material averment in the complaint, other than
those as to the amount of unliquidated damages, shall
be deemed admitted when not specifically denied.
Allegations of usury in a complaint to recover usurious
interest are deemed admitted if not denied under
oath.
Section 1, Rule 9
Defenses and objections not pleaded. — Defenses
and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction
over the subject matter, that there is another action
pending between the same parties for the same
cause, or that the action is barred by a prior judgment
or by statute of limitations, the court shall dismiss the
claim.
Section 6, Rule 16
Pleading grounds as affirmative defenses. — If no
motion to dismiss has been filed, any of the grounds
for dismissal provided for in this Rule may be pleaded
as an affirmative defense in the answer and, in the
discretion of the court, a preliminary hearing may be
had thereon as if a motion to dismiss had been filed.
(5a)
The dismissal of the complaint under this section shall
be without prejudice to the prosecution in the same or
separate action of a counterclaim pleaded in the
answer.
Phil American General Insurance v Sweet Lines
SUMMARY: A suit for recovery between Philamgen/TPI and
SLI/DVAPSI was dismissed on the ground of prescription. The
bills of lading contained a paragraph providing for shortened
periods to file claims, BUT they were never presented in
evidence. Prescription was raised as an affirmative defense by
SLI, but Philamgen/TPI failed to specifically deny the existence,
much less the genuineness and due execution, of the written
instruments in question. This amounts to an admission.
JUDICIAL ADMISSIONS, verbal or written, made by the
parties in the pleadings or in the course of the trial or other
proceedings in the same case, are conclusive. Instrument
need not be presented formally because it is considered an
admitted fact. While Petitioners objected to the validity of the
agreement in the bills of lading, the existence of such were
impliedly admitted.
FACTS:
• Petitioners Philamgen and TPI filed a maritime suit against
SLI and DVAPSI for the recovery of the cost of lost or
damaged shipment only 5820 bags from 2 consignments
consisting of around 7000 bags of Low Density Polyethylene
arrived in good condition.
• Before trial, a compromise agreement was entered and the
trial court granted a motion to dismiss on the ground of the said
amicable settlement.
• On appeal, CA reversed on the ground of prescription.
• Petitioners filed a petition for review on certiorari, faulting CA
for the following: 1) upholding the existence of a prescriptive
period; 2) granting that it exists, in not finding it null and voidl 3)
assuming arguendo it is valid and legal, in failing to conclude
that petitioners substantially complied.
WON it was error for the CA to reverse the appealed decision
on the ground of prescription when SLI failed to offer the bills
of lading in evidence –NO
*The bills of lading were said to contain shortened periods for
filing a claim and instituting a court action against the carrier.
The claims must have been made at the time of delivery to
consignee or agent, if container shows exterior signs of
damage or shortage.
-CA: although the bills of lading were not offered in evidence,
the litigation obviously revolves on such bills of lading which
are practically the documents or contracts sued upon, hence,
they are inevitably involved and their provisions cannot be
disregarded in the determination of the relative rights of the
parties thereto.
-SC:
• Prescription as an affirmative defense was seasonably raised
EXCEPT the bills of lading were not formally offered in
evidence. The issue now is whether or not prescription can be
maintained as such a defense and constantly upheld on the
strength of mere references thereto.
• Because petitioners are suing upon SLI’s contractual
obligation under the contract of carriage, the bills of lading can
be categorized as ACTIONABLE DOCUMENTS. Under the
rules, they must be properly pleaded either as causes of action
or defenses, and the genuineness and due execution of which
are deemed admitted unless specifically denied under oath by
the adverse party.
• Petitioner failed to specifically deny the existence, much less
the genuineness and due execution, of the written instruments
in question. This amounts to an admission. JUDICIAL
ADMISSIONS, verbal or written, made by the parties in the
pleadings or in the course of the trial or other proceedings in
the same case, are conclusive. Instrument need not be
presented formally because it is considered an admitted fact.
• Petitioners failed to touch on the matter of the non-
presentation of the bills of lading in their brief and earlier on in
the appellate proceedings in this case, hence it is too late in
the day to now allow the litigation to be overturned on that
score, for to do so would mean an over indulgence in
technicalities.
• The non-inclusion of the controverted bills of lading in the
formal offer of evidence cannot, under the facts of this
particular case, be considered a fatal procedural lapse as
would bar respondent carrier from raising the defense of
prescription.
• The carriage of the cargo involved was effected pursuant to
an "Application for Delivery of Cargoes without Original Bill of
Lading" issued on May 20, 1977 in Davao City with the
notation therein that said application corresponds to and is
subject to the terms of bills of lading. It would be a safe
assessment to interpret this to mean that, sight unseen,
petitioners acknowledged the existence of said bills of lading.
By having the cargo shipped on respondent carrier’s vessel
and later making a claim for loss on the basis of the bills of
lading, petitioners for all intents and purposes accepted said
bills. Having done so they are bound by all stipulations
contained therein. As petitioners are suing for recovery on the
contract, and in fact even went as far as assailing its validity by
categorizing it as a contract of adhesion, then they necessarily
admit that there is such a contract, their knowledge of the
existence of which with its attendant stipulations they cannot
now be allowed to deny.
• While Petitioners objected to the validity of the agreement in
the bills of lading, the existence of such were impliedly
admitted.
WON the shortened periods in par 5 of the Bill of Lading (30
days for filing a claim with the carrier in case of loss of or
damage to the cargo and 60 days from accrual of the right of
action for instituting an action in court) is valid -YES
• The fundamental reason or purpose of such a stipulation is
not to relieve the carrier from just liability, but reasonably to
inform it that the shipment has been damaged and that it is
charged with liability therefor, and to give it an opportunity to
examine the nature and extent of the injury. This protects the
carrier by affording it an opportunity to make an investigation of
a claim while the matter is fresh and easily investigated so as
to safeguard itself from false and fraudulent claims.
• In the absence of any statutory limitation and subject only to
the requirement on the reasonableness of the stipulated
limitation period, the parties to a contract of carriage may fix by
agreement a shorter time for the bringing of suit on a claim for
the loss of or damage to the shipment than that provided by
the statute of limitations. Such limitation is not contrary to
public policy for it does not in any way defeat the complete
vestiture of the right to recover, but merely requires the
assertion of that right by action at an earlier period than would
be necessary to defeat it through the operation of the ordinary
statute of limitations.
• While petitioners may possibly have a cause of action, for
failure to comply with the above condition precedent they lost
whatever right of action they may have in their favor or, taken
in another sense, that remedial right or right to relief had
prescribed.
• The shipment in question was discharged into the custody of
the consignee on May 15, 1977, and it was from this date that
petitioners’ cause of action accrued, with thirty (30) days
therefrom within which to file a claim with the carrier for any
loss or damage which may have been suffered by the cargo
and thereby perfect their right of action. The claim was filed
with SLI only on April 28, 1978, way beyond the period
provided in the bills of lading.
• TPI filed a provisional claim with DVAPSI as early as June 14,
1977 and, as found by the trial court, a survey fixing the extent
of loss of and/or damage to the cargo was conducted on July 8,
1977 at the instance of petitioners. If petitioners had the
opportunity and awareness to file such provisional claim and to
cause a survey to be conducted soon after the discharge of the
cargo, then they could very easily have filed the necessary
formal, or even a provisional, claim with SLI itself within the
stipulated period therefor, instead of doing so only on April 28,
1978 despite the vessel's arrival at the port of destination on
May 15, 1977. Petitioners slept on their rights and they must
now face the consequences of such inaction.
• There is no constitutional or statutory prohibition infirming
paragraph 5 of subject Bill of Lading. The stipulated period of
60 days is reasonable enough for appellees to ascertain the
facts and thereafter to sue, if need be, and the 60-day period
agreed upon by the parties which shortened the statutory
period within which to bring action for breach of contract is
valid and binding.
• The report on losses and damages is not the claim referred to
and required by the bills of lading for it does not fix
responsibility for the loss or damage, but merely states the
condition of the goods shipped. The claim contemplated herein,
in whatever form, must be something more than a notice that
the goods have been lost or damaged; it must contain a claim
for compensation or indicate an intent to claim.
• Unlike a common carrier, an arrastre operator does not labor
under a presumption of negligence in case of loss, destruction,
or deterioration of goods discharged into its custody. In other
words, to hold an arrastre operator liable for loss of and/or
damage to goods entrusted to it there must be preponderant
evidence that it did not exercise due diligence in the handling
and care of the goods.
• What can only be inferred from the factual findings of the trial
court is that by the time the cargo was discharged to DVAPSI,
loss or damage had already occurred and that the same could
not have possibly occurred while the same was in the custody
of DVAPSI, as demonstrated by the observations of the trial
court quoted at the start of this opinion.
Spouses Abrajano v Heirs of Salas
Associated Bank v Spouses Montano
FACTS: Spouses Justiniano and Ligaya Montano (the
Montanos) owned three (3) parcels of land situated in Cavite.
Justiniano was then serving as congressman for the lone
district of Cavite and as minority floor leader. When the country
was under martial law, Justiniano went to the United States of
America (USA) to avoid the harassment and threats made
against him by the dictator. While still in the USA, the
Montanos transferred the said properties to Tres Cruces Agro-
Industrial Corporation (TCAIC) in exchange for shares of stock
in the company, allowing the Montanos to control 98% of the
stockholdings of TCAIC. Thus, on the certificates of title
registered in the name of the Montanos were cancelled and
were replaced with transfer certificates of title (TCTs) in TCAIC
s name. A year later, TCAIC sold the properties to International
Country Club, Inc. (ICCI) for P6,000,000.00. The sale resulted
in the cancellation of the titles of TCAIC, and in their transfer to
ICCI. ICCI immediately mortgaged the parcels of land to
Citizens Bank and Trust Co. (later renamed as Associated
Bank) for P2,000,000.00.The loan matured but remained
unpaid, prompting Associated Bank to foreclose the mortgage.
The properties were then put on public auction and were sold
for P5,700,000.00 to Associated Bank, the sole and highest
bidder. Ownership over the said properties was consolidated
by Associated Bank and, new TCTs were issued in its name.
Montanos returned to the country. After discovering the
transfer of the properties, the Montanos immediately took
physical possession of the same and began cultivating the land.
Montanos filed an action for reconveyance of title against
herein petitioner, praying, in sum, that the transfer of the
properties from TCAIC to ICCI, and from ICCI to Associated
Bank, be declared null and void.
ISSUES: 1. Whether it is proper to file a motion to dismiss after
an answer has already been filed;
2. Whether the complaint should be dismissed on the grounds
set forth therein.
HELD:
1. On the propriety of the motion to dismiss It is, therefore,
inconsequential that petitioner had already filed an answer to
the complaint prior to its filing of a motion to dismiss. The
option of whether to set the case for preliminary hearing after
the filing of an answer which raises affirmative defenses, or to
file a motion to dismiss raising any of the grounds set forth in
Section 1, Rule 16 of the Rules are procedural options which
are not mutually exclusive of each other. Moreover, as
petitioner correctly pointed out, respondents failed to oppose
the motion to dismiss despite having been given the
opportunity to do so by the RTC. Therefore, any right to
contest the same was already waived by them.
2. On whether the complaint for reconveyance should be
dismissed In their complaint for reconveyance, respondents
alleged that the transfer of the three parcels of land from
TCAIC to ICCI was facilitated through threat, duress and
intimidation employed by certain individuals. On its face, the
complaint clearly states a cause of action and raises issues of
fact that can be properly settled only after a full-blown trial. On
this ground, petitioner s motion to dismiss must, perforce, be
denied. However, the RTC s ruling that the action has already
prescribed was not correct. The RTC, however, seemed to
have overlooked the fact that the basis of respondents
complaint for reconveyance is not fraud but threat, duress and
intimidation, allegedly employed by Marcos cronies upon the
relatives of the Montanos while the latter were on selfexile. In
fact, fraud was neither specifically alleged nor remotely implied
in the complaint. The four-year prescriptive period must, be
reckoned from the said date. Thus, when respondents filed
their complaint for reconveyance on September 15, 1989, the
period provided for by law had not yet prescribed. Therefore,
petitioner s motion to dismiss should be denied.
Sun Bros v Caluntad
Toribio v Bidin
Facts: Engracio Francisco and Juliana Esteban were the
registered owners of the parcel of land Zamboanga. At the
death of said spouses, they were survived by their ten (10)
children who inherited their state in equal pro indiviso shares.
Subsequently, the property was subdivided among the heirs
and a portion designated as Lot No. 1943-B was allotted to the
Justa Francisco. Justa died and was survived among by eight
(8) children namely: Dionoso, Eufremia, Alfonso, Rafael,
Petrona, Olegario, Segundino and Eusebia, all surnamed
Toribio, who eight heirs, Eufremia, Alfonso and Petrona, sold
their in the property to Ramon Ledesma. Rafael also sold his
share to Dinisio who, in turn, sold the same to Ramon
Ledesma. Thus, the latter acquired four (4) shares out of eight
(8) shares, or a ½ pro indiviso share of Lot 1943-B.
Subsequently, Dionisio sold his own hereditary share in the
aforesaid estate of his mother to Juanito Camacho, who by
said sale acquired a 1/8 pro indiviso share of the property.
The three other heirs, petitioners SegundinoEusebia and
Olegario alleging that their shares had never been sold nor in
any wise transferred or disposed to others filed a case against
herein private respondents for recovery of hereditary rights.
How Juanito Camacho, who was entitled to only a total area of
931 square meters, nor, how one Dalmacio Ramos, Jr.,
acquired ¼ share of the property was allegedly not known to
them.
In their answer, the defendants-respondents alleged that the
shares of plaintiffs-petitioners had likewise been sold to
DionisioToribio, their brother, who, in turn, sold the same to
Juanito Camacho and Dalmacio Ramos. The alleged sale from
petitioners to Dionisio and the sale from Dionisio to the
respondents were evidenced by deeds of sale, xerox copies of
which were appended to and made an integral part of the
respondents' partition agreement between the respondents
and also a xerox copy of the respondents' transfer certificates
of title.
While testifying during the trial, EusebiaToribio was asked
whether she executed any sale of her share in the parcel of
land in litigation. The counsel for private respondents objected,
raising the proper mode of contesting the genuineness of an
actionable document pursuant to Sections 7 and 8, Rule 8 of
the Revised Rules of Court. The trial court sustained the
objection.
Petitioners, thereupon, filed a constancia with a motion for
reconsideration stating that the documents submitted by the
respondents were merely evidentiary in nature, not a cause of
action or defense, the due execution and genuineness of which
they had to prove. They alleged that the subject of litigation
was the hereditary shares of plaintiffs-petitioners, not any
document. They stated that the defense consisting mainly of
transfer certificates of titles in the respondents' names
originating from the sale from petitioners to Dionisio and from
the latter to the respondents were merely evidentiary in nature.
They argued that a simple specific denial without oath is
sufficient. The court denied the motion for reconsideration. The
documents attached to the respondents' answer and made an
integral part thereof were declared to be the very foundation or
basis of the respondents' defense and not merely evidentiary in
nature. Hence, this petition for review on certiorari.
Issue:
Whether or not the deeds of sale allegedly executed by the
petitioners in favor of their brother DionisioToribio and
appended to the respondents' answer are merely evidentiary in
nature or the very foundation of their defense which must be
denied under oath by the petitioner.
Held: It is clear that the respondents anchor their defense on
the deeds of sale by virtue of which the hereditary rights of all
the petitioners over Lot 1943-B were sold, transferred, and
conveyed in favor of their brother, DionisioToribio, who in turn
sold the same to herein respondents. The deed of sale
executed by the petitioners in favor of their brother Dionisio is
an essential and indispensable part of their defense to the
allegation that the petitioners had never disposed of their
property.
The proper procedure was for the petitioners to specifically
deny under oath the genuineness and due execution of the
questioned deeds of sale and to set forth what they claim to be
the facts. However, the oversight or negligence of petitioners'
counsel in not properly drafting a reply to the answer and an
answer to the counter claim is not necessarily fatal to their
cause.
The complaint was verified under oath by the petitioners.
The petitioners' counsel was obviously lulled into complacency
by two factors. First, the plaintiffs, now petitioners, had already
stated under oath that they never sold, transferred, or disposed
of their shares in the inheritance to others. Second, the usual
procedure is for a defendant to specifically deny under oath the
genuineness and due execution of documents set forth in and
annexed to the complaint. Somehow, it skipped counsel's
attention that the rule refers to either an action or a defense
based upon a written instrument or document. It applies to both
plaintiffs and defendants.
Under the facts of this case, the private respondents were
placed on adequate notice by Paragraph 11 of the verified
complaint that they would be caned upon during trial to prove
the genuineness or due execution of the disputed deeds of
sale.
Moreover, the heirs of OlegarioToribio, his widow and minor
children represented by their mother, are among the plaintiffs-
petitioners. They are not parties to the deeds of sale allegedly
executed by their father, aunt, and uncle. They are not required
to deny the deeds of sale under oath. The private respondents
will still have to introduce evidence to establish that the deeds
of sale are genuine and that they were truly executed by the
parties with authority to dispose of the disputed property.
WHEREFORE, the order of the respondent court dated July 20,
1981 is hereby REVERSED and SET ASIDE. The Regional
Trial Court which took over the cases of the respondent court
is ordered to receive the petitioners' evidence regarding the
genuineness and due execution of the disputed deeds of sale.
3. Bill of particulars
Rule 12
Section 1. When applied for; purpose. — Before
responding to a pleading, a party may move for a definite
statement or for a bill of particulars of any matter which is not
averted with sufficient definiteness or particularity to enable
him properly to prepare his responsive pleading. If the pleading
is a reply, the motion must be filed within ten (10) days from
service thereof. Such motion shall point out the defects
complained of, the paragraphs wherein they are contained,
and the details desired. (1a)
Section 2. Action by the court. — Upon the filing of the
motion, the clerk of court must immediately bring it to the
attention of the court which may either deny or grant it outright,
or allow the parties the opportunity to be heard. (n)
Section 3. Compliance with order. — If the motion is
granted, either in whole or in part, the compliance therewith
must be effected within ten (10) days from notice of the order,
unless a different period is fixed by the court. The bill of
particulars or a more definite statement ordered by the court
may be filed either in a separate or in an amended pleading,
serving a copy thereof on the adverse party. (n)
Section 4. Effect of non-compliance. — If the order is
not obeyed, or in case of insufficient compliance therewith, the
court may order the striking out of the pleading or the portions
thereof to which the order was directed or make such other
order as it deems just. (1[c]a)
Section 5. Stay of period to file responsive pleading. —
After service of the bill of particulars or of a more definite
pleading, or after notice of denial of his motion, the moving
party may file his responsive pleading within the period to
which he was entitled at the time of filing his motion, which
shall not be less than five (5) days in any event. (1[b]a)
Section 6. Bill a part of pleading. — A bill of particulars
becomes part of the pleading for which it is intended. (1[a]a)
Tantuico v Republic
SUMMARY: The Sandiganbayan denied Francisco Tantuico’s
motion for a bill of particulars on the ground that the particulars
were evidentiary in nature. The SC ruled that the allegations in
the complaint pertaining are deficient in that they merely
articulate conclusions of law and presumptions unsupported by
factual premises. A complaint must inform the defendant
clearly and definitely of the claims made against him, thus the
motion for a bill of particulars was granted.
FACTS
- Francisco Tantuico, Jr., Chairman of the Commission on
Audit, was included as defendant in the case filed with the
Sandiganbayan against Kokoy Romualdez and Ferdinand
Imelda Marcos for reconveyance, reversion, accounting,
restitution, and damages.
- Tantuico filed for a Motion for Bill of Particulars claiming that it
is necessary that he be furnished the particulars sought so that
he can intelligently prepare his responsive pleading and
prepare for trial
- Sandiganbayan denied the motion for a bill of particulars on
the ground that the particulars sought are evidentiary in nature.
MR was also denied.
ISSUE
WON the Sandiganbayan acted with grave abuse of discretion
in issuing the resolutions denying the motion for a bill of
particulars - YES
RATIO
- Complaint - a concise statement of the ultimate facts
constituting the plaintiff’s cause or causes of action
- The complaint shall contain in a methodical and logical form a
plain, concise and direct statement of the ultimate facts on
which the plaintiff relies for his claim, omitting the statement of
mere evidentiary facts
- Office, purpose, or function is to inform the defendant clearly
and definitely of the claims made against him so that he may
be prepared to meet the issues at the trial
- Rules on pleading speak of two kinds of facts
- Ultimate facts - the essential facts constituting the plaintiff’s
cause of action. A fact is essential if it cannot be stricken out
without leaving the statement of the cause of action insufficient.
- Evidentiary facts - those facts which are necessary for
determination of the ultimate facts; they are the premises upon
which conclusions of ultimate facts are based. Facts which
furnish evidence of existence of some other fact.
- Where the allegations of the complaint are vague, indefinite,
or in the form of conclusions, the proper recourse would be a
motion for a bill of particulars.
- The complaint alleges that "Defendant Ferdinand E. Marcos,
together with other Defendants, acting singly or collectively,
and/or in unlawful concert with one another, in flagrant breach
of public trust and of their fiduciary obligations as public
officers, with gross and scandalous abuse of right and power
and in brazen violation of the Constitution and laws of the
Philippines, embarked upon a systematic plan to accumulate
ill-gotten wealth”
- The allegations that defendant Marcos, together with the
other defendants "embarked upon a systematic plan to
accumulate ill-gotten wealth" and that they acted "in flagrant
breach of public trust and of their fiduciary obligations as public
officers, with gross and scandalous abuse of right and in
brazen violation of the Constitution and laws of the Philippines",
are conclusions of law unsupported by factual premises.
- Nothing is said in the complaint about the acts in execution of
the alleged "systematic plan to accumulate ill-gotten wealth", or
which are supposed to constitute "flagrant breach of public
trust", "gross and scandalous abuse of right and power", and
"violations of the Constitution and laws of the Philippines". The
complaint does not even allege what duties the petitioner failed
to perform, or the particular rights he abused.
- The complaint also alleged that Tantuico, taking undue
advantage of his position as Chairman of the Commission on
Audit and with grave failure to perform his constitutional duties
as such Chairman, acting in concert with Defendants
Ferdinand E. Marcos and Imelda R. Marcos facilitated and
made possible the withdrawals, disbursements and
questionable use of government funds as stated in the
foregoing paragraphs to the grave and irreparable damage and
injury of Plaintiff and the entire Filipino people."
- The allegation that petitioner "took undue advantage of his
position as Chairman of the Commission on Audit," that he
"failed to perform his constitutional duties as such Chairman,"
and acting in concert with Ferdinand E. Marcos and Imelda R.
Marcos, "facilitated and made possible the withdrawals,
disbursements, and questionable use of government funds as
stated in the fore going paragraphs, to the grave and
irreparable damage and injury of plaintiff and the entire Filipino
people", are mere conclusions of law. - There was also an
allegation that Tantuico acted as dummy, nominee, or agent by
allowing himself "to be used as instrument in accumulating ill-
gotten wealth through government concessions, orders and/or
policies prejudicial to Plaintiff" or "to be (an) incorporator,
director, or member of corporations beneficially held and/or
controlled" by the Marcoses and Romualdezes - Complaint
does not contain any allegation as to how petitioner became,
or why he is perceived to be, a dummy, nominee or agent and
is thus a conclusion of law without factual basis.
- The allegations in the complaint pertaining to Tantuico are
deficient in that they merely articulate conclusions of law and
presumptions unsupported by factual premises. Hence, without
the particulars prayed for in the motion for a bill of particulars, it
can be said the Tantuico can not intelligently prepare his
responsive pleading and for trial.
- The Sandiganbayan acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in promulgating the
questioned resolutions.
4. Default
Section 3 Rule 9
Default; declaration of. — If the defending party fails to answer
within the time allowed therefor, the court shall, upon motion of
the claiming party with notice to the defending party, and proof
of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant,
unless the court in its discretion requires the claimant to submit
evidence. Such reception of evidence may be delegated to the
clerk of court. (1a, R18)
(a) Effect of order of default. — A party in default shall be
entitled to notice of subsequent proceedings but not to take
part in the trial. (2a, R18)
(b) Relief from order of default. — A party declared in
default may at any time after notice thereof and before
judgment file a motion under oath to set aside the order of
default upon proper showing that his failure to answer was due
to fraud, accident, mistake or excusable negligence and that
he has a meritorious defense. In such case, the order of
default may be set aside on such terms and conditions as the
judge may impose in the interest of justice. (3a, R18)
(c) Effect of partial default. — When a pleading asserting
a claim states a common cause of action against several
defending parties, some of whom answer and the others fail to
do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.
(4a, R18).
(d) Extent of relief to be awarded. — A judgment
rendered against a party in default shall not exceed the amount
or be different in kind from that prayed for nor award
unliquidated damages. (5a, R18).
(e) Where no defaults allowed. — If the defending party
in an action for annulment or declaration of nullity of marriage
or for legal separation fails to answer, the court shall order the
prosecuting attorney to investigate whether or not a collusion
between the parties exists, and if there is no collusion, to
intervene for the State in order to see to it that the evidence
submitted is not fabricated.
Section 3 Rule 67
Defenses and objections. — If a defendant has no objection or
defense to the action or the taking of his property, he may file
and serve a notice of appearance and a manifestation to that
effect, specifically designating or identifying the property in
which he claims to be interested, within the time stated in the
summons. Thereafter, he shall be entitled to notice of all
proceedings affecting the same.
If a defendant has any objection to the filing of or the
allegations in the complaint, or any objection or defense to the
taking of his property, he shall serve his answer within the time
stated in the summons. The answer shall specifically designate
or identify the property in which he claims to have an interest,
state the nature and extent of the interest claimed, and adduce
all his objections and defenses to the taking of his property. No
counterclaim, cross-claim or third-party complaint shall be
alleged or allowed in the answer or any subsequent pleading.
A defendant waives all defenses and objections not so alleged
but the court, in the interest of justice, may permit amendments
to the answer to be made not later than ten (10) days from the
filing thereof. However, at the trial of the issue of just
compensation whether or not a defendant has previously
appeared or answered, he may present evidence as to the
amount of the compensation to be paid for his property, and he
may share in the distribution of the award.

Filinvest v CA
SUMMARY: Filinvest filed a complaint for recovery of
possession against Philfinance. Philfinance, thru 4 different
lawyers, filed a total of six motions for extension to file an
Answer, on the basis of the counsel's inability to read the
records because of too much work, heavy pressure of work,
the unexpected wedding of one of the counsel, and illness of
counsel. The lower court granted the first 5 motions but denied
the sixth. It declared Philfinance in default and rendered a
judgment in favor of Filinvest. Philfinance petitioned that the
order of default be set aside and that his super late Answer be
admitted. Court held that Philfinance was properly held in
default. The inability of 4 lawyers to file an Answer within the
88-day extension granted by the lower court was inexcusable.
Besides, Philfinance, in its Answer, did not have a meritorious
defense; thus, nothing would have been gained had the order
of default been set aside.
• 12 January 1984, 8:00 a.m.: Philfinance filed a 15-page
Answer with Counterclaim, denying Filinvest's claims and
averring that Filinvest's title is null and void.
• 25 January 1984: Philfinance filed a petition for: (1) the
admission of its Answer, (2) setting aside of the default order
and the default judgment, and (3) leave to file its third-party
complaint against third-party defendants.
• Lower court denied Philfinance's petition.
• Court of Appeals set aside the order of default.
LOWER COURT's ARGUMENT: Philfinance's counsel's
negligence to file the Answer for a period of 90 days is
inexcusable. Furthermore, Philfinance had no meritorious
defense to warrant a change of decision. Finally, the matter
alleged in the third-party complaint is foreign to the issues of
the subject case.
CA's ARGUMENT: Philfinance was placed under receivership
making it difficult for its lawyers to have access to the records
of the corporation.
ISSUE: Whether the defendant, Philippine Underwriters
Finance Corporation, was properly declared in default
HELD: Yes. Order of default is sustained.
The lower court granted the five (5) motions and denied the
sixth motion before it declared Philfinance in default. All in all,
the lower court gave the Philfinance eighty-eight (88) days to
answer the complaint, so it can not be stated that the trial court
has in any way unduly favored the Filinvest, neither can it be
considered that Philfinance has been denied due process.
• Philfinance's counsel's having difficulty with the records of the
corporation is not only insufficient to explain six motions for
postponement but was also belatedly raised. It was a mere
afterthought on the part of counsel when he raised such
reason after they were already adjudged in default. (See:
grounds for motions for extension above).
• The pattern of inexcusable neglect, if not deliberate delay is
all too clear.
• Philfinance was given extraordinary opportunity to have its
day in court when the lower court
had given it a total of eighty-eight (88) days from service of
summons to file its answer to the complaint. The inability of
four (4) lawyers to prepare the answer for this long period of
time is not justified.
• Cited Pahilanga v. Luna: ... "but it is not error, or an abuse of
discretion, on the part of the court to refuse to set aside its
order of default and to refuse to accept the answer where it
finds no justifiable reason for the delay in the filing of the
answer."
• On the merits of the case, Court agreed with lower court's
ruling. Philfinance's mere denials did not prevail over
convincing evidence on record. Philfinance had no valid
defense. Citing Pahilanga again, "nothing would be gained by
having the order of default set aside where the party held in
default has no valid defense in his favor for in such case, he
will just the same fail on the merits even if the default order is
lifted."
Reminders from the Court: This Court reiterates that it is
concerned with the heavy caseloads of courts at all levels.
Most of the delays for which the justice system is assailed
come from failure of counsel to cooperate with candor and will
in the speedy resolution of cases. We have instituted
continuous trial. We are revising the Rules of Court to make
them responsive to current problems. We call judges to task
when their cases are not adjudicated with accuracy and
dispatch. The least we can do is sustain them when they come
across litigants like the private respondent in this case.
Cavili v Florendo
Garcia v CA
SUMMARY: Antonio Garcia filed an action for damages
against Sps. Uy for padlocking stalls in Virra Mall. Sps. Uy
failed to file a reply within the reglementary period. TC
declared them in default. Garcia filed for motion for execution.
TC granted and issued writ of execution. Sps. Uy challenged
validity of writ of execution because it was granted without
notice to them or hearing. CA granted Uy’s petition for
certiorari. SC held that a party in default is still entitled to
motion for execution pending appeal as default is not a waiver
of all rights; only a waiver of right to present defense and
examine (and corss examine witnesses). CA affirmed.
FACTS:
• Antonio Garcia filed an action for damages against Sps. Uy
for padlocking stalls in Virra Mall.
• Sps. Uy failed to file a reply within the reglementary period.
• TC declared them in default. Garcia filed for motion for
execution pending appeal.
• TC granted and issued writ of execution.
• Sps. Uy challenged validity of writ of execution because it
was granted without notice to them or hearing.
• CA granted Uy’s petition for certiorari and set aside TC’s
order to grant writ of execution.
• Garcia argues that notice to the adverse party becomes
mandatory only in case the defendant has NOT been declared
in default.
ISSUES:
W/N a party declared in default is entitled to notice of a motion
for execution pending appeal of a judgment of default? – YES
HELD:
• Cited case: SC Johnson & Son v. CA
o A party declared in default is entitled to notice of the motion
for execution pending appeal.
o Without notice, the various recourses available to defaulted
party after judgment will be rendered illusory.
o Consistent with this right to notice of final order or judgment
is the right to notice of the motion for execution pending appeal
of the default judgment.
• Remedies available:
o No judgment rendered yet: Motion to set aside order of
default
o After judgment: Motion for New Trial, Petition for Relief from
Judgment, Appeal the Judgment, or special civil action for
certiorari
• As being in default does not imply a waiver of rights, as
aforesaid, the defaulted party has the right to expect
compliance with the requisites for executing a judgment
pending appeal under Section 2 of Rule 39
Sec. 2. Execution pending appeal. – On motion of the
prevailing party with notice to the adverse party the court may,
in its discretion, order execution to issue even before the
expiration of the time to appeal, upon good reasons to be
stated in a special order. If a record on appeal is filed
thereafter, the motion and the special order shall be included
therein.
• A party in default only loses the right to present his defense
and examine or cross-examine witnesses. It does not mean
that being declared in default, and thereby losing one's
standing, constitutes a waiver of all rights
• A party in default is still entitled to notice of final judgments
and orders and proceeding
Talsan v Baliwag
SUMMARY: Respondents were attesting that they should not
have been held in default since the TC did not acquire
jurisdiction over
them due to improper service of summons. Court held that
there was proper service of summons as to respondent
corporation,
Baliwag. It was also held that the appeal taken by respondents
was the proper remedy as a default judgment is an
adjudication on
the merits and is appealable. (See held for other remedies)
FACTS:
- Passenger bus owned by Baliwag Transit, Inc. and driven by
private respondent, Angeles Ramos, hit and bumped a van
owned by petitioner Francisco San Diego and driven by Alfredo
Santiago
- Petitioners instituted a civil complaint for damages against
respondents before the RTC of Makati
- Summons and a copy of the complaint was served upon
private respondents’ cashier, Baby Cansino at respondents’
bus
station in Caloocan City, who received the court process but
refused to sign the original summons
- TC, upon motion of petitioners, declared respondents in
default. Pursuant to this order, petitioners presented evidence
exparte
- Respondents received a copy of the default order and it
moved for reconsideration, alleging: TC did not acquire
jurisdiction over its person by reason of improper service of
summons; Person who received the summons is only a cash
receiving clerk “who, unschooled with the law, and whose
position is not so integrated with the management circle of
defendant corporation, did not fully appreciate the legal
significance and consequences of said document…”
- Without ruling on respondents’ motion, TC rendered a
decision ordering respondents to pay repair cost of the van,
medical and hospitalization expenses, unearned income of the
passengers and the corporation (for non-use of the van), moral
damages, exemplary damages and attorney’s fees
- Without waiting for resolution of the MR, respondents
appealed to CA, arguing that they could not be held in default
due to improper service of summons
- CA: Annulled and set aside TC order of default and
remanded case to TC for appropriate proceedings, since TC
did not acquire jurisdiction over person of respondent
RESPONDENT’S ARGUMENT:
- TC did not acquire jurisdiction over it due to improper service
of summons: Baby Cansino was a mere “cash receiving clerk”
and cannot be considered as an agent or representative of the
corporation; Also, summons was served at a place other than
respondent’s principal place of business (served at one of the
respondents’ bus stations in Caloocan) - Basically,
respondents’ main argument was that it was not properly
notified of the action against it and so, it could not be held in
default
ISSUES:
1) WON there was valid service of summons upon
respondents – As to bus driver, NO; As to the corporation, YES
2) WON appeal taken by respondents instead of motion for
new trial is the proper remedy – YES
HELD:
VALIDITY OF SERVICE OF SUMMONS UPON
RESPONDENTS
1) Service of summons upon Angeles Ramos (bus driver) was
improper
- In actions in personam, summons must be served by handing
a copy thereof to the defendant in person, or, if he refuses to
receive it, by tendering it to him
- If efforts to find defendant personally makes prompt service
impossible, service may be effected by leaving copies of the
summons at the defendant’s dwelling house/residence with
person of suitable age and discretion residing therein, or by
leaving copies at his office or regular place of business with
competent person
- In this case, sheriff hastily effected service of summons by
substituted service without first attempting to personally serve
the same upon the defendant
- Lower court thus did not acquire jurisdiction over the person
of Ramos; Judgment against him without effect
2) Service of summons upon Baliwag Transit, through its
cashier, Baby Cansino, is proper
- Under Section 13 of Rule 14 of the Revised Rules of Court, if
the defendant is a corporation organized under the laws of the
Philippines, service of summons may be made on the
president, manager, secretary, cashier, agent, or any of its
directors
 Affidavit of Ms. Cansino stating that she is not the cashier of
respondent Baliwag, but merely a cash receiving clerk
deserves scant consideration for being self-serving
 The Sheriff's Return certifying that summons were served
upon defendant Baliwag is prima facie evidence of the fact that
the person on whom the summons was served was in fact the
cashier of the company
 Affidavit cannot overcome the presumption that official duty
had been regularly performed, which presumption may be
overcome only by clear and convincing evidence
- Even if Ms. Cansino is not the cashier, still service would be
proper as she is considered an agent of the company
authorized to receive court processes
- Since respondents don’t deny that they actually received
summons, there is substantial compliance with the rules on
service of summons
- Service on respondent’s bus terminal (even if it is not the
corporation’s main office) does not render the service of
summons invalid
 Artemio Baltazar v. CA: “Section 13, does not, however,
impose such requirement, and so personal service upon the
corporation may be effected through service upon, for instance,
the president of the corporation at his office, or residential
address”
- TC validly acquired jurisdiction over Baliwag APPEAL TAKEN
BY RESPONDENTS WAS PROPER (PERTINENT UNDER
THIS TOPIC)
- It is well-settled that, a defendant who has been declared in
default has the following remedies, to wit:
(a) He may, at any time after discovery of the default but
before judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was
due to fraud, accident, mistake or excusable neglect, and that
he has a meritorious defense;
b) If judgment has already been rendered when he discovered
the default, but before the same has become final and
executory, he may file a motion for new trial under Section 1(a)
of Rule 37;
c) If he discovered the default after the judgment has become
final and executory, he may file a petition for relief under
Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against
him as contrary to the evidence or to the law, even if no
petition to set aside the order of default has been presented by
him
- Private respondents can appeal the judgment pursuant to
Section 2(3), Rule 41 of the Rules of Court
- A default judgment is an adjudication on the merits and is
thus appealable
SIDE NOTE
- Since driver has yet to come under court’s adjudicatory
powers, there is no proof adduced as to his negligence upon
which Baliwag’s primary but vicarious liability (under Art. 2180)
could be based
- No presumption of negligence in the selection and
supervision of employees can operate against or be overcome
by Baliwag since the factual basis for such presumption does
not exist
Ortero v Tan
FACTS:
- Complaint- Tan filed for collection of sum of money and
damages with MTCC Cagayan de Oro against Otero alleging
that Otero purchased on credit petroleum products from his
Petron outlet for P270k; despite demands, Otero defaulted
- Despite receipt of summons through wife Otero, he failed to
file answer with MTCC
- Tan then filed a Motion to declare Otero in default; Otero
denied receiving summons
- Hearings were conducted until MTCC issued an order
declaring Otero in default, to which a copy was sent to Otero,
and thereby allowing Tan to present his evidence ex parte: his
employees, showing various statements of account
MTCC
- In favor of Tan, noting that Otero’s failure to file an answer
despite notice is a tacit admission of Tan’s claim
- Otero appealed to RTC asserting that MTCC’s decision is
factually baseless and that he was deprived of due process
RTC
- Affirmed MTCC, noting that the statements of account
presented were overwhelming enough to prove Otero’s
indebtedness, and that he was served due notice contrary to
Otero’s claim of deprivation of due process
- Otero filed for MR but was denied; then filed for review with
CA
- Explaining that evidence presented were presented
by Betache who was not a witness by Tan
- That the genuineness and due execution of said
statements of account, being private, must first be established
lest the said documents be rendered inadmissible in evidence
CA
- Assailed RTC and MTCC decision, noting that any defense
which Otero may have against Tan is already deemed waived
due to Otero’s failure to file his answer
ISSUE:
- WON Otero, declared in default by MTCC, in the appellate
proceedings, may still raise the failure of Tan to authenticate
the statements of account which he adduced in evidence
HELD:
- YES
- A defendant who fails to file an answer may, upon motion, be
declared by the court in default
- A party in default loses his right to present his
defense, control the proceedings, and examine or cross-
examine witnesses
- However, the fact that a defendant has lost his standing in
court for having been declared in default does not mean that
he is left without recourse
- Remedies available to party in default (Lina v CA, et
al):
- May, at any time after discovery thereof
and after judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was
due to fraud, accident, mistake, or excusable neglect, and that
he has meritorious defenses
- If judgment has been rendered when
defendant discovered default, but before the same has
become final and executor, he may file a motion for new trial
- If defendant discovered the default after the
judgment has become final and executor, he may file a petition
for relief
- He may also appeal from the judgment
rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been
presented by him
- Grounds that may be raised in such an appeal:
- Failure of plaintiff to prove material
allegations of the complaint
- Decision is contrary to law
- Amount of judgment is excessive or
different in kind from that prayed for
- In this case, Otero asserts that Tan failed to prove the
material allegations of his complaint since the statements of
account which he presented are inadmissible in evidence
- Contrary then to CA, it is not accurate to state that having
been declared in default by the MTCC, Otero is already
deemed to have waived any and all defenses which he may
have against Tan’s claim
RULE 6
Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
(fourth, etc.)-party complaint, or complaint-in-intervention.
The defenses of a party are alleged in the answer to the
pleading asserting a claim against him.
An answer may be responded to by a reply. (n)
Section 6. Counterclaim. — A counterclaim is any claim
which a defending party may have against an opposing party.
(6a)
Section 7. Compulsory counterclaim. — A compulsory
counterclaim is one which, being cognizable by the regular
courts of justice, arises out of or is connected with the
transaction or occurrence constituting the subject matter of the
opposing party's claim and does not require for its adjudication
the presence of third parties of whom the court cannot acquire
jurisdiction. Such a counterclaim must be within the jurisdiction
of the court both as to the amount and the nature thereof,
except that in an original action before the Regional Trial
Court, the counter-claim may be considered compulsory
regardless of the amount. (n)
Section 9. Counter-counterclaims and counter-
crossclaims. — A counter-claim may be asserted against an
original counter-claimant.
A cross-claim may also be filed against an original cross-
claimant. (n)
RULE 9
Section 2. Compulsory counterclaim, or cross-claim,
not set up barred. — A compulsory counterclaim, or a cross-
claim, not set up shall be barred. (4a)
RULE 11
Section 4. Answer to counterclaim or cross-claim. — A
counterclaim or cross-claim must be answered within ten (10)
days from service. (4)
Section 8. Existing counterclaim or cross-claim. — A
compulsory counterclaim or a cross-claim that a defending
party has at the time he files his answer shall be contained
therein. (8a, R6)
Section 9. Counterclaim or cross-claim arising after
answer. — A counterclaim or a cross-claim which either
matured or was acquired by a party after serving his pleading
may, with the permission of the court, be presented as a
counterclaim or a cross-claim by supplemental pleading before
judgment. (9, R6)
Section 10. Omitted counterclaim or cross-claim. —
When a pleader fails to set up a counterclaim or a cross-claim
through oversight, inadvertence, or excusable neglect, or when
justice requires, he may, by leave of court, set up the
counterclaim or cross-claim by amendment before judgment.
RULE 16
Section 6. Pleading grounds as affirmative defenses. —
If no motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an
affirmative defense in the answer and, in the discretion of the
court, a preliminary hearing may be had thereon as if a motion
to dismiss had been filed. (5a)
The dismissal of the complaint under this section shall be
without prejudice to the prosecution in the same or separate
action of a counterclaim pleaded in the answer. (n)
RULE 17
Section 2. Dismissal upon motion of plaintiff. — Except
as provided in the preceding section, a complaint shall not be
dismissed at the plaintiff's instance save upon approval of the
court and upon such terms and conditions as the court deems
proper. If a counterclaim has been pleaded by a defendant
prior to the service upon him of the plaintiffs motion for
dismissal, the dismissal shall be limited to the complaint. The
dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action
unless within fifteen (15) days from notice of the motion he
manifests his preference to have his counterclaim resolved in
the same action. Unless otherwise specified in the order, a
dismissal under this paragraph shall be without prejudice. A
class suit shall not be dismissed or compromised without the
approval of the court. (2a)
CIVIL CODE
Art. 1283. If one of the parties to a suit over an obligation has a
claim for damages against the other, the former may set it off
by proving his right to said damages and the amount thereof.
(n)
RSC
SEC. 13. Response.– The defendant shall file with the court
and serve on the plaintiff a duly accomplished and verified
Response within a non-extendible period of ten (10) days from
receipt of summons. The Response shall be accompanied by
certified photocopies of documents, as well as affidavits of
witnesses and other evidence in support thereof. No evidence
shall be allowed during the hearing which was not attached to
or submitted together with the Response, unless good cause is
shown for the admission of additional evidence.
RSP
Sec. 3. Pleadings. —
A. Pleadings allowed. — The only pleadings allowed to
be filed are the complaints, compulsory counterclaims
and cross-claims' pleaded in the answer, and the
answers thereto.
Sec. 5. Answer. — Within ten (10) days from service of
summons, the defendant shall file his answer to the complaint
and serve a copy thereof on the plaintiff. Affirmative and
negative defenses not pleaded therein shall be deemed
waived, except for lack of jurisdiction over the subject matter.
Cross-claims and compulsory counterclaims not asserted in
the answer shall be considered barred. The answer to
counterclaims or cross-claims shall be filed and served within
ten (10) days from service of the answer in which they are
pleaded.
Note: It is not a compulsory counterclaim when the
counterclaim has another indispensible party who is not a party
to the original case. Example: A files a suit for damages
against B which arose from a contract. C is B’s co-party in the
contract. B’s counterclaim is an action for rescission of the
contract. This would not be a compulsory counter claim
because C is not a party to the original suit, would be an
indispensible party in the counterclaim.
GOJO v GOYOLA
Facts
· On 26 May 1951, Segundo, Goyala together with his
now deceased wife Antonina Almoguera sold to appellant by a
"Deed of Pacto de Retro Sale" a certain parcel of agricultural
land (2.5 ha for P750.00), the repurchase to be made,
according to the deed, within one year.
· On July 4, 1951, the vendee paid another P100.00 as
addition to the purchase price.
· About ten (10) years after the execution of the said
document, the vendee filed with the CFI by way of a petition for
consolidation of ownership of the land described and involved
in the "Deed of Pacto de Retro Sale."
· The vendee alleged that the date for repurchase, May
26, 1952, having expired and the vendors not having been able
to repurchase, the ownership over the land involved had
become consolidated in him; and that for the purpose of
recording in the Registry of Property the said consolidation of
ownership, it was necessary that a judicial order be issued to
that effect and accordingly prayed for such an order.
· Segundo Goyala filed an opposition or answer to the
petition and alleged the ff:
1. his wife Antonina had died in the year 1959
2. denied the pacto de retro sale, it was a cash loan of
P750.00 payable in one year without interest
3. additional 60 pesos was granted as loan
4. respondents executed a mortgage in favor of the
petitioner on a parcel of coconut land described
5. although the deed was executed in the form of a
pacto de retro sale, the true and real intention of the
parties thereto was that the same was a mere
mortgage to secure the payment of the original loan of
P750.00 together with the additional amount received
thereafter, making a total loan of P810.00, payable
within, one year without interest.
6. in the evening of May 26, 1952, he and his wife went
to the house of the petitioner and tendered to him the
sum of P810.00 to pay the debt, but said petitioner
refused to receive the same and to cancel the
document of mortgage.
7. He filed a counterclaim and prayed that
- Court dismiss the petition
- Order Gojo to accept the 810
- Declare the document to be mortgage and not a pacto de
retro sale, and ordering the same cancelled and with no
more force and effect;
- Ordering the petitioner to pay the respondents the sum of
P1,800.00 per annum beginning May 26, 1951 until the
final termination of this case as the reasonable monetary
value of the products for the said property, and from this
amount, there should be deducted however, the
corresponding legal interest annually on said loans;
- In case, however, that this Court should find the said
instrument to be a true pacto de retro sale, and not a
mere mortgage, it is hereby prayed that the petitioner be
ordered to execute a deed of resale or repurchase of said
property in favor of the respondents in accordance with
Art. 1606 third paragraph of the Civil Code."
· Goyala informed the trial court that the Antonina was
already dead and that her surviving nearest kin are her
children, namely: Leonor, Pedro, Juliana, Dolores, Valentina,
Soledad, Penya, Mamerta, Salvador, Genesa, Felipe, Elegio
— all surnamed Goyala.
· RTC required the plaintiff is to submit an amended
Complaint substituting therein for one of the defendants,
Antonina Almoguera, now deceased her successors in interest
as party defendants, within the reglementary period.
· Goyala filed a motion to dismiss the complaint or petition
on the ground that 43 days had lapsed after appellant's receipt
of the trial court order, yet he failed and neglected to submit
the amended complaint required of him.
· Trial court granted the MTD.
· Goyola filed a motion to declare Gojo in default in
respect of said appellee's counterclaim. TC granted the petition
· The Trial court ruled in favor of the defendant
(counterclaim)
o Deed of Pacto de Retro Sale an equitable mortgage and
Goyala and Almoguera are allowed to redeem the property;
o orders Faustino Gojo to withdraw the amount of P810.00
deposited with the Clerk of Court in full settlement of the loan,
o cancels and declares without force and effect the
aforementioned Deed of Pacto de Retro Sale executed by the
spouses Segundo Goyala and Antonina Almoguera in favor of
Faustino Gojo. Without costs
o ordering the plaintiff to deliver and restore the possession
of the land in question to the defendants.
· Appellant appealed to the Court of Appeals which upon
its finding that the said appeal involves purely questions of law,
certified the same to this Court for resolution.
Issues
[RELEVANT ISSUE] WON THE TRIAL COURT ERRED IN
DISMISSING PETITIONER’S COMPLAINT
It is true that under Section 3 of Rule 17, a complaint may be
dismissed for failure to prosecute if the plaintiff fails to comply
with an order of the court, but it is obvious that the said
provision cannot apply when the order supposedly ignored is a
void one, as in this case.
The trial court ordered petitioner to amend the complaint only
because it was informed that one of the defendants had died,
the court directing that the plaintiff should name the heirs of the
deceased as defendants in lieu of said deceased. Such an
order runs counter to Caseñas vs. Resales, et al.:
When certain parties die and due notice was given to the trial
court, it devolved on the said court to order, not the
amendment of the complaint, but the appearance of the legal
representatives of the deceased in accordance with the
procedure and manner outlined in Rule 3, Section 17 of the
Rules of Court, which provide:.
"SECTION 17. Death of party. — After a party dies and
the claim is not thereby extinguished, the court shall order,
upon proper notice, the legal representative of the deceased to
appear and to be substituted for the deceased, within a period
of thirty (30) days, or within such time as may be granted. If the
legal representative fails to appear within said time, the court
may order the opposing party to procure the appointment of a
legal representative of the deceased within a time to be
specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The
court charges involved in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.
The heirs of the deceased may be allowed to be substituted for
the deceased, without requiring the appointment of an executor
or administrator and the court may appoint guardian ad litem
for the minor heirs."
Barrameda vs. Barbara: an order to amend the complaint,
before the proper substitution of parties as directed by the rule
has been effected, is void and imposes upon the plaintiff no
duty to comply therewith to the end that an order dismissing
the said complaint, for such non-compliance, would similarly be
void.
Ferriera, et al. vs. Gonzales (1958), the continuance of a
proceedings during the pendency of which a party thereto dies,
without such party having been validly substituted in
accordance with the rules, amounts to a "lack of jurisdiction".
WON PLAINTIFF IS IN DEFAULT WITH RESPECT TO
DEFENDANT'S COUNTERCLAIM;
No occasion for the trial court to declare him in default in
respect of appellee's counterclaim in this case, for the reasons
that:
(a) counterclaim "falls within the category of compulsory
counterclaim" which does not call for an independent answer
as the complaint already denies its material allegations; and
(b) dismissal of the complaint in this case without prejudice
carried with it the dismissal of the said counterclaim.
A plaintiff who fails or chooses not to answer a compulsory
counterclaim may not be declared in default, principally
because the issues raised in the counterclaim are deemed
automatically joined by the allegations of the complaint.
There can be no doubt that appellant's counterclaim was a
compulsory one in as much as it arises out of or is necessarily
connected with transaction or occurrence that is the subject
matter of the complaint; the complaint alleged that the right of
appellee to repurchase the property in question had already
expired and asked for an order of consolidation.
Appellant's counterclaim was for reformation of the deed
claiming that it was only a mortgage. Thus the counterclaim
was clearly inconsistent with and directly controverted; the
whole theory and basic allegations of the complaint. In
consequence, appellant's complaint stood as the answer to
appellee's counterclaim; hence, the incorrectness of the trial
court's order declaring the appellant in default in regard to said
counterclaim is evident.
Besides, in line with the principle underlying Sec. 2 of Rule 17,
it is not proper to dismiss a complaint when a compulsory
counterclaim has been pleaded by defendant.
The reason is obvious. Under the cited provision, the right of
the plaintiff to move for the dismissal of an action after the
defendant has filed his answer is qualified by the clause
providing that: "If a counterclaim has been pleaded by a
defendant prior to the service upon him of the plaintiff's motion
to dismiss, the action shall not be dismissed against the
defendant's objection unless the counterclaim can remain
pending for independent adjudication by the court." With this
limitation, the power of the court to dismiss the complaint upon
motion of plaintiff, which is usually without prejudice, is not
purely discretionary. The purpose is to avoid multiplicity of suits
over the same matter which would necessarily entail
unnecessary expense and, what is worse, possibility of conflict
and inconsistency in the resolution of the same questions. The
same considerations would obtain, if the defendant were the
one to ask for dismissal. The best interests of justice require
that conflicting claims regarding the same matter should be
decided in one single proceeding. Dismissing the complaint
without prejudice, as the trial court has done in this case, albeit
upon motion of the defendant, will not prevent the undesirable
multiplication of suits and reventilation of the same issues in
the subsequent action that may be filed by virtue of the
reservation made in the disputed order of dismissal.
FINANCIAL BUILDING CORP V FORBES PARK
Facts:
The USSR owned a lot in Forbes Park and it engaged the
services of Financial Building for the construction of a multi-
level office and staff apartment building. Due to the USSR’s
representation that it would be building a residence for its
Trade Representative, Forbes Park authorized its construction
and work began shortly thereafter. However, Financial building
submitted to the Makati City Government a second building
plan for the construction of a multi-level apartment building,
which was different from the first plan for the construction of a
residential building submitted to Forbes Park.
Forbes Park discovered the second plan and it enjoined further
construction work. Forbes Park suspended all permits of entry
for the personnel and materials of Financial Building in the said
construction site.
Financial Building filed in the Regional Trial Court a complaint
for Injunction and Damages with a prayer for Preliminary
Injunction against Forbes Park. Forbes Par, in turn, filed a
Motion to Dismiss on the ground that Financial Building had no
cause of action because it was not the real party-in-interest.
Forbes Park won in this case thus it sought to vindicate its
rights by filing a complaint for damages against Financial
Building arising from the violation of its regulations. Trial court
rendered a decision in favor or Forbes Park.
Issue:
W/N THE ALLEGED CLAIMS AND CAUSES OF ACTION
THEREIN ARE BARRED BY PRIOR JUDGMENT AND/OR
ARE DEEMED WAIVED FOR ITS FAILURE TO INTERPOSE
THE SAME AS COMPULSORY COUNTERCLAIMS IN THE
EARLIER CASE
Held:
Yes. The instant case is barred due to Forbes Park’s failure to
set it up as a compulsory counterclaim in the earlier case.
A compulsory counterclaim is one which arises out of or is
necessarily connected with the transaction or occurrence that
is the subject matter of the opposing party’s claim.[15] If it is
within the jurisdiction of the court and it does not require for its
adjudication the presence of third parties over whom the court
cannot acquire jurisdiction, such compulsory counterclaim is
barred if it is not set up in the action filed by the opposing
party.[16]
Thus, a compulsory counterclaim cannot be the subject of a
separate action but it should instead be asserted in the same
suit involving the same transaction or occurrence, which gave
rise to it
To determine whether a counterclaim is compulsory or not, we
have devised the following tests: (1) Are the issues of fact or
law raised by the claim and the counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on defendant’s
claim absent the compulsory counterclaim rule? (3) Will
substantially the same evidence support or refute plaintiff’s
claim as well as the defendant’s counterclaim? and (4) Is there
any logical relation between the claim and the counterclaim?
Affirmative answers to the above queries indicate the existence
of a compulsory counterclaim.
Since Forbes Park filed a motion to dismiss in Civil Case No.
16540, its existing compulsory counterclaim at that time is now
barred.
A compulsory counterclaim is auxiliary to the proceeding in the
original suit and derives its jurisdictional support therefrom.[19]
A counterclaim presupposes the existence of a claim against
the party filing the counterclaim. Hence, where there is no
claim against the counterclaimant, the counterclaim is improper
and it must dismissed, more so where the complaint is
dismissed at the instance of the counterclaimant.
CALO V. AJAX INTERNATIONAL 22 SCRA 996 (1968)
FACTS: Plaintiff Calo ordered from defendant Ajax
International 1,200 ft of John Shaw wire rope evidenced by
Charge Order no 37071 for P3,420
1. Plaintiff alleged that when the said rope was delivered,
it was 300 ft short. Plaintiff then wrote a letter asking for
complete delivery or account adjustment of the alleged
undelivered wire rope
2. Incidentally, Adolfo Benavides acquired the
outstanding credit of Calo from Ajax. Benavides filed a
complaint against Calo before MTC Manila. A judgment by
default was entered and a writ of execution was issued against
Calo. The case was later remanded for further proceedings
3. In turn, Calo filed before CFI Agusan a complaint
against Ajax asking for either complete delivery of charge order
no 37071 of that she be relieved from paying P855
4. Instead of filing an answer, Ajax moved for the
dismissal of the case on the ground that the subject matter
involved was related to a pending case filed in Manila by
Benavides. The trial court sustained the motion and dismissed
the case. Plaintiff filed MR (denied).
5. The dismissal of the case in CFI Agusan was
premised on the theory that the petitioner’s claim is a
compulsory counterclaim to the case filed before MTC Manila
ISSUE: WON the case filed in CFI Agusan is a compulsory
counter-claim
HELD: No, the plaintiff’s claim is not a compulsory
counterclaim for the simple reason that the amount thereof
exceeds the jurisdiction of the municipal trial court. The rule
that a compulsory counterclaim not set up is barred, when
applied to the municipal court, presupposes that the amount is
within the said court’s jurisdiction. Otherwise, it would result to
an absurd situation where a claim must be filed within the MTC
which is prohibited from taking cognizance of, being beyond its
jurisdiction.
Besides, the reason underlying the rule, which is to settle all
related controversies in one sitting only, is not obtained. Even
if the counterclaim in excess of the amount cognizable by the
inferior court is set up, the defendant cannot obtain positive
relief. The rules allow this only for the defendant to prevent
plaintiff from recovering from him. This means that should the
court find both plaintiff’s complaint and the defendant’s
counterclaim (for an amount exceeding said court’s jurisdiction)
meritorious, it will simply dismiss the complaint on the ground
that the defendant has a bigger credit. Since the defendant still
has to institute a separate action for the remaining balance of
his counterclaim, the previous litigation did not really settle all
related controversies.
Plaintiff Calo's claim of P12,000.00 not being a compulsory
counterclaim in Civil Case No. VI-93062, it need not be filed
there. The pendency then of said civil case could not be
pleaded in abatement of Civil Case No. 860. Consequently, the
lower court erred in dismissing plaintiff's complaint.
DISPOSITIVE: The order of dismissal is reversed and the
case is remanded for further proceedings
AGUSTIN V BACALAN
FACTS
Ejectment complaint filed against Bacalan who files a
counterclaim
Bacalan is a lessee of a one-door ground floor space in a
building owned by the late Susana Agustin. Due to
nonpayment of rentals an action to eject him was filed.
In his answer, Bacalan included a counter-claim alleging that
the action was "unfounded and devoid of merits, tainted with
malice and bad faith on the part of the plaintiff, and filed merely
to annoy, vex, embarrass and inconvenience the defendant."
City Court Of Cebu dismissed counterclaim and ordered him to
vacate, Bacalan appeals before CFI Cebu
The City Court of Cebu dismissed the counterclaim and
ordered the Bacalan to vacate and pay damages. From this
decision, the Bacalan filed an appeal with Branch Ill of the
Court of First Instance of Cebu.
CFI reverses in favor of Bacalan, it also awarded huge
amounts of damages (16000 total)
The judgment ordered Agustin to pay the ff amounts
a) P10,000.00 as moral damages;
b) P5,000.00 as exemplary damages;
c) P1,000.00 as attorney's fees; and
NO APPEAL was taken by AGUSTIN. The decision lapsed into
finality and became executory.
Agustin files a new complaint! He claims that the damages
awarded are beyond jurisdiction of City court of Cebu, hence
void.
Thereafter, with the aid of new counsel, Agustin filed another
complaint with Branch V, CFI of Cebu for the declaration of the
nullity of the above-cited decision of Branch III, CFI of Cebu
because the award (16,000) exceeded the jurisdictional
amount cognizable by the City Court of Cebu and the said
Branch III of this Court has no jurisdiction to award the
defendants an amount more than P10,000.00.
He claims that this is beyond the jurisdiction of the City Court
of Cebu because Section 88 of the Judiciary Act of 1948, as
amended, limits the jurisdiction of the city courts in civil cases
to P10, 000.00 as the maximum amount of the demand.
ISSUE: WON the Court of First Instance may, in an appeal,
award the defendant-appellee's counterclaim in an amount
exceeding or beyond the jurisdiction of the court of origin.
HELD: NO
A court has no jurisdiction to hear and determine a set-off or
counterclaim in excess of its jurisdiction
A counterclaim beyond the court’s jurisdiction may only be
pleaded by way of defense, the purpose of which, however, is
only to defeat or weaken plaintiff’s claim, but NOT to obtain
affirmative relief (Section 5, Rule 5). Nevertheless, Bacalan set
up his claim in excess of the jurisdiction of the city court as a
compulsory counterclaim.
What is the legal effect of such a move?
The effect of that is to waive so much of your claim as would
exceed the jurisdictional amount
An appellant who files his brief and submits his case to the
Court of Appeals for decision, without questioning the latter's
jurisdiction until decision is rendered therein, should be
considered as having voluntarily waives so much of his claim
as would exceed the jurisdiction of said Appellate Court
Thus, by presenting his claim voluntarily before the City Court
of Cebu, the defendant-appellee submitted the same to the
jurisdiction of the court. He became bound thereby. The
amount of P10,000.00 being the jurisdictional amount assigned
the City Court of Cebu, whose jurisdiction the defendant-
appellee has invoked, he is thereby deemed to have waived
the excess of his claim beyond P10,000.00. It is as though the
defendant-appellee had set up a counterclaim in the amount of
P10,000.00 only.
May the CFI then, on appeal, award defendant-appellee's
counterclaim beyond that amount?
STILL NO: A counterclaim not presented in the inferior court
cannot be entertained in the Court of First Instance on appeal
Thus, the defendant-appellee's counterclaim beyond
P10,000.00, the jurisdictional amount of the city Court of Cebu,
should be treated as having been deemed waived. It is as
though it has never been brought before trial court. It may not
be entertained on appeal.
The amount of judgment, therefore, obtained by the defendant-
appellee on appeal, cannot exceed the jurisdiction of the court
in which the action began. Since the trial court did not acquire
jurisdiction over the defendant's counterclaim in excess of the
jurisdictional amount, the appellate court, likewise, acquired no
jurisdiction over the same. Appellate jurisdiction being not only
a continuation of the exercise of the same judicial power which
has been executed in the court of original jurisdiction, also
presupposes that the original and appellate courts are capable
of participating in the exercise of the same judicial power
Application
Award of damages in excess of the jurisdictional amount (10k)
is null and void
It is, of course, a well-settled rule that when court transcends
the limits prescribed for it by law, its adjudications will be utterly
void and of no effect either as an estoppel or otherwise.
The Court of First Instance, in the case at bar, having awarded
judgment in favor of the defendant-appellee in excess of its
appellate jurisdiction to the extent of P6,000.00 over the
maximum allowable award of P10,000.00, the excess is null
and void and of no effect. Such being the case, an action to
declare the nullity of the award as brought by the plaintiff-
appellant before the Court of First Instance of Cebu, Branch V
is a proper remedy.
A counterclaim is a cause of action separate and independent
from the plaintiffs claim over against the defendant.
(This is why the court’s jurisdiction over the main action would
not be affected even if the counterclaim is void, since they are
separate causes of action)
The nullity of such portion of the decision in question, however,
is not such as to affect the conclusions reached by the court in
the main case for ejectment. As held in a case where the
amount set up by the defendant was not proper as a defense
and it exceeded the inferior court's jurisdiction, it cannot be
entertained therein, but the court's jurisdiction over the main
action will remain unaffected. Consequently, the decision over
the main action, in the case at bar, must stand, best
remembering that a counter-claim, by its very nature, is a
cause of action separate and independent from the plaintiff's
claim against the defendant.
MELITON V CA
FACTS:
 June 22, 1988: Respondent Nelia Ziga, in her own behalf
and as attorney-infact of Alex A. Ziga and Emma A. Ziga-Siy,
filed a complaint, docketed as Civil Case No. RTC 88-1480
against petitioner Lydia Meliton for rescission of a contract of
lease over a parcel of land. Alleged grounds: failure to deposit
the one month rental and to pay the monthly rentals due; her
construction of a concrete wall and roof on the site of a
demolished house on the leased premises without the lessor's
written consent; and her unauthorized sublease of the leased
property to a third party.
 July 29, 1988: Meliton filed an answer to the complaint
denying the material averments thereof and setting up three
counterclaims for recovery of the value of her kitchenette
constructed on the leased parcel of land and which was
demolished by private respondent; the value of the
improvements introduced in the kitchenette to beautify it, plus
the value of the furniture and fixtures purchased for use in the
kitchenette; and moral damages, attorney's fees
 May 29, 1989: Trial Court, on motion of private respondent
contending that her cause of action had already become moot
and academic by the expiration of the lease contract,
dismissed the complaint.
 The counterclaims of Meliton were also dismissed for non-
payment of the docket fees.
 On December 6, 1989, petitioners Lydia Meliton and Virgilio
Meliton filed a complaint against private respondent for
recovery of the same amounts involved and alleged in their
counterclaims in Civil Case No. RTC 88-1480, which complaint
was docketed as Civil Case No. RTC 89-1942
 On February 15, 1991, private respondent filed a motion to
dismiss the complaint on the ground that the cause of action
therein was barred by prior judgment in Civil Case No.RTC 88-
1480
 On February 22, 1991, the court denied Ziga's motion to
dismiss the complaint in Civil Case No. RTC 89-1942 on the
ground that the dismissal of the petitioner's counterclaims in
Civil Case No. RTC 88-1480 is not an adjudication on the
merits as the court did not acquire jurisdiction over the
counterclaims for failure of Meliton to pay the docket fees,
hence the said dismissal does not constitute a bar to the filing
of the later complaint.
 Ziga's motion for reconsideration of the foregoing order was
denied by the lower court for lack of merit in its order of March
18, 1991. Ziga went to the SC but was referred to CA. CA
granted CA’s petition, thus this appeal by Meliton.
ISSUES: 1. Whether or not the counterclaims of petitioners are
compulsory in nature. - Compulsory
2. Whether or not petitioners, having failed to seek
reconsideration of or to take an appeal from the order of
dismissal of their counterclaims, are already barred from
asserting the same in another action. – NO
HELD: Issue #1
 Counterclaim is compulsory if (a) it arises out of, or is
necessarily connected with, the transaction or occurrence
which is the subject matter of the opposing party's claim; (b) it
does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction; and (c)
the court has jurisdiction to entertain the claim.
 The determination of whether the counterclaim is
compulsory or permissive, the "one compelling test of
compulsoriness" is the logical relationship between the claim
alleged in the complaint and that in the counterclaim, that is,
where conducting separate trials of the respective claims of the
parties would entail a substantial duplication of effort and time,
as where they involve many of the same factual and/or legal
issues.
 In the Civil Case No. 88-1480, all the requisites of a
compulsory counterclaim are present. The counterclaims are
logically related to the complaint. Ziga’s complaint was for
rescission of the contract of lease due to Meliton's breach of
her obligations under the said contract. On the other hand,
Meliton's counter claims were for damages for unlawful
demolition of the improvements she introduced pursuant to her
leasehold occupancy of the premises, as well as for the filing of
that civil suit which is contended to he clearly unfounded. Both
the claims therein of petitioners and private respondent arose
from the same contract of lease. The rights and obligations of
the parties, as well as their potential liability for damages,
emanated from the same contractual relation.
 Petitioners' right to claim damages for the unlawful
demolition of the improvements they introduced on the land
was based on their right of possession under the contract of
lease which is precisely the very same contract sought to be
rescinded by private respondent in her complaint.
 CA correctly held that the counterclaims of petitioners are
compulsory in nature.
Issue #2
 According to Section 4, Rule 9 of the Rules of Court, a
counterclaim not set up shall be barred if it arises out of or is
necessarily connected with the transaction or occurrence that
is the subject matter of the opposing party's claim and does not
require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction. However, said rule
is not applicable to the case at bar.
 Contrary to the claim of private respondent, it cannot be said
that herein petitioners failed to duly interpose their causes of
action as counterclaims in the previous action.
 Petitioners' claims were duly set up as counterclaims in the
prior case but the same were dismissed by reason of non-
payment of docket fees. The ruling of respondent Court of
Appeals to the effect that the failure of petitioners to appeal or
to move for reconsideration of the said order of dismissal bars
them from asserting their claims in another action cannot be
upheld.
 Where a compulsory counterclaim is made the subject of a
separate suit, it may be abated upon a plea of auter action
pendant or litis pendentia and/or dismissed on the ground of
res judicata, depending on the stage or status of the other suit.
 The present action cannot be dismissed either on the ground
of litis pendentia since there is no other pending action
between the same parties and for the same cause, nor on the
ground of res judicata.
 In order that a prior judgment will constitute a bar to a
subsequent case, the following requisites must concur: (1) the
judgment must be final; (2) the judgment must have been
rendered by a court having jurisdiction over the subject matter
and the parties; (3) the judgment must be on the merits; and (4)
there must be between the first and second actions, identity of
parties, of subject matter, and of causes of action.
 Civil Case No. RTC 88-1480, was dismissed upon motion of
private respondent, plaintiff therein, under Section 2 of Rule 17.
Dismissal thereunder is without prejudice, except when
otherwise stated in the motion to dismiss or when stated to be
with prejudice in the order of the court. The dismissal of the
case without prejudice indicates the absence of a decision on
the merits and leaves the parties free to litigate the matter in a
subsequent action as though the dismissal action had not been
commenced. The discontinuance of a case not on the merits
does not bar another action on the same subject matter.
Evidently, therefore, the prior dismissal of herein petitioners’
counterclaims is not res judicata and will not bar the filing of
another action based on the same causes of action.
 Also, the trial court, in dismissing the complaint of private
respondent, did not intend to prejudice the claims of petitioners
by barring the subsequent judicial enforcement thereof. As
stated therein, “(t)he court in dismissing the counterclaim(s)
has taken into account the fact that a counterclaim partakes of
the nature of a complaint and/or a cause of action against the
plaintiffs." This is a clear indication, deducible by necessary
implication, that the lower court was aware of the fact that
petitioners could avail of the causes of action in said
counterclaims in a subsequent independent suit based thereon
and that there was no legal obstacle thereto.
 In dismissing private respondent's complaint, the trial court
could not but have reserved to petitioners, as a condition for
such dismissal, the right to maintain a separate action for
damages. Petitioners' claims for damages in the three
counterclaims interposed in said case, although in the nature
of compulsory counterclaims but in light of the aforesaid
reservation in the dismissal order, are consequently
independent causes of action which can be the subject of a
separate action against private respondent.
 Assuming arguendo that the bar under the rule on
compulsory counterclaims may be invoked, the peculiar
circumstances of this case irresistibly and justifiedly warrant
the relaxation of such rule. The court a quo dismissed
petitioners' counterclaims for non–payment of docket fees
pursuant to our then ruling in Manchester Development
Corporation, et al. vs. Court of Appeals, et. al. before its
modification. The failure of petitioners to seek reconsideration
of or to take an appeal from the order of dismissal of the
counterclaim should not prejudice their right to file their claims
in a separate action because they were thereby made to
understand and believe that their counterclaims were merely
permissive and could be the subject of a separate and
independent action. Under the Rules, there is no need to pay
docket fee for a compulsory counterclaim. The ruling in
Manchester applies specifically to permissive counterclaims
only, thereby excluding compulsory counterclaims from its
purview, and that was the ruling of the court below to which the
litigants therein submitted. Had the trial court correctly
specified that petitioners' counterclaims were compulsory,
petitioners could have objected to the dismissal sought by
private respondent on the ground that said counterclaims could
not remain pending for independent adjudication.
VISAYAN PACKING v REPACOM
Narvasa, J.
Facts: Petitioner and respondent entered into a contract of sale.
Under the contract, petitioner bound itself to pay the purchase
price in ten (10) equal yearly installments with interest. Prior to
the due date of the first installment, respondent sent petitioner
a written reminder thereof. Petitioner, however, responded by
filing in the CFI of Manila two (2) special civil actions for
declaratory relief, alleging ambiguity in the contract between it
and respondent consisting in the agreement’s failure to clearly
state the precise time when the obligation to pay the first
installment of the price would arise. Respondent filed a civil
action for collection based on what it deemed to be the due
date. Petitioner moved to dismiss the collection suit alleging
that because of the pendency of the declaratory relief actions,
no cause of action could be deemed to exist in favor of
respondent for collection. The Motion was however denied and
petitioner was later ordered to pay respondent the sum claimed.
Petitioner appealed the decision. The Court of Appeals
affirmed the decision in the collection suit. Petitioner assailed
the decision contending that the money claim should have
been set up as a compulsory counterclaim in the declaratory
relief action, and since respondent had not done this, but had
instead set it up in a separate suit, the claim had thereby
become barred.
Issue: Whether the failure to set up the money claim in the
declaratory relief actions barred its collection in a separate civil
case?
Held: No. There is nothing in the nature of a special civil action
for declaratory relief that proscribes the filing of a counterclaim
based on the same transaction, deed or contract subject of the
complaint. Ideally, in the case at bar, the separate action for
collection should have been dismissed and set up as a
compulsory counterclaim in the declaratory relief suits, by way
of an amended answer. This was not done. The actions
proceeded separately and were decided on the merits. The
final verdict was that the declaratory relief suits instituted by
petitioner were unmeritorious, quite without foundation and, in
the light of all the relevant facts, appear to have been initiated
by petitioner merely to obstruct and delay the payment of the
installments clearly due from it, payment of which was decreed
in the collection suit. Under the circumstances, and taking into
account the not inconsiderable length of time that the case at
bar has been pending, it would be to do violence to substantial
justice to pronounce the proceedings fatally defective for
breach of the rule on compulsory counterclaims. Rules of
procedure are after all laid down in order to attain justice.
FRANCISCO V CA
Facts: On 23 January 1985, Francisco Motors Corp. filed a
complaint against Spouses Gregorio and Librada Manuel to
recover P3,412.06, representing the balance of the jeep body
purchased by the Manuels from Francisco Motors; an
additional sum of P20,454.80 representing the unpaid balance
on the cost of repair of the vehicle; and P6,000.00 for cost of
suit and attorney's fees. To the original balance on the price
of jeep body were added the costs of repair. In their
answer, the Manuel spouses interposed a counterclaim for
unpaid legal services by Gregorio Manuel in the amount of
P50,000 which was not paid by the incorporators, directors and
officers of Francisco Motors. The trial court decided the
case on 26 June 1985, in favor of Francisco Motors in
regard to its claim for money, but also allowed the
counter-claim of the Manuel spouses. Both parties
appealed. On 15 April 1991, the Court of Appeals
sustained the trial court's decision. Hence, the present
petition for review on certiorari
Issue
WON there was jurisdiction over petitioner for counterclaim
YES. With regard to the procedural issue raised by petitioners
allegation, that it needed to be summoned anew in order for
the court to acquire jurisdiction over it, we agree with
respondent courts view to the contrary. Section 4, Rule 11 of
the Rules of Court provides that a counterclaim or cross-claim
must be answered within ten (10) days from service. Nothing in
the Rules of Court says that summons should first be served
on the defendant before an answer to counterclaim must be
made. The purpose of a summons is to enable the court to
acquire jurisdiction over the person of the defendant. Although
a counterclaim is treated as an entirely distinct and
independent action, the defendant in the counterclaim, being
the plaintiff in the original complaint, has already submitted to
the jurisdiction of the court. Following Rule 9, Section 3 of the
1997 Rules of Civil Procedure,[21] if a defendant (herein
petitioner) fails to answer the counterclaim, then upon motion
of plaintiff, the defendant may be declared in default. This is
what happened to petitioner in this case, and this Court finds
no procedural error in the disposition of the appellate court on
this particular issue. Moreover, as noted by the respondent
court, when petitioner filed its motion seeking to set aside the
order of default, in effect it submitted itself to the jurisdiction of
the court. As well said by respondent court:
Further on the lack of jurisdiction as raised by plaintiff-
appellant[,] [t]he records show that upon its request, plaintiff-
appellant was granted time to file a motion for reconsideration
of the disputed decision. Plaintiff-appellant did file its motion for
reconsideration to set aside the order of default and the
judgment rendered on the counterclaim.
Thus, even if the court acquired no jurisdiction over plaintiff-
appellant on the counterclaim, as it vigorously insists, plaintiff-
appellant is considered to have submitted to the courts
jurisdiction when it filed the motion for reconsideration seeking
relief from the court. (Soriano vs. Palacio, 12 SCRA 447). A
party is estopped from assailing the jurisdiction of a court after
voluntarily submitting himself to its jurisdiction. (Tejones vs.
Gironella, 159 SCRA 100). Estoppel is a bar against any
claims of lack of jurisdiction.
KOREA TECHNOLOGY v LERMA
FACTS: Petitioner KOGIES and respondent PGSMC executed
a Contract whereby KOGIES would set up an LPG Cylinder
Manufacturing Plant for respondent. Respondent unilaterally
cancelled the contract on the ground that petitioner had altered
the quantity and lowered the quality of the machineries and
equipment it delivered. Petitioner opposed informing the latter
that PGSMC could not unilaterally rescind their contract nor
dismantle and transfer the machineries and equipment on
mere imagined violations by petitioner. Petitioner then filed a
Complaint for Specific Performance against respondent before
the RTC. Respondent filed its Answer with Compulsory
Counterclaim asserting that it had the full right to dismantle and
transfer the machineries and equipment because it had paid
for them in full as stipulated in the contract. KOGIES filed a
motion to dismiss respondent’s counterclaims arguing that
when PGSMC filed the counterclaims, it should have paid
docket fees and filed a certificate of non-forum shopping, and
that its failure to do so was a fatal defect. The RTC dismissed
the petitioner’s motion to dismiss respondent’s counterclaims
as these counterclaims fell within the requisites of compulsory
counterclaims.
ISSUE: WON payment of docket fees and certificate of non-
forum shopping were required in the respondent’s Answer with
counterclaim?
HELD: NO. The counterclaims of PGSMC were incorporated in
its Answer with Compulsory Counterclaim in accordance with
Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure,
the rule that was effective at the time the Answer with
Counterclaim was filed. Sec. 8 on existing counterclaim or
cross-claim states, “A compulsory counterclaim or a cross-
claim that a defending party has at the time he files his answer
shall be contained therein.” As to the failure to submit a
certificate of forum shopping, PGSMC’s Answer is not an
initiatory pleading which requires a certification against forum
shopping under Sec. 524 of Rule 7, 1997 Revised Rules of
Civil Procedure. It is a responsive pleading, hence, the courts a
quo did not commit reversible error in denying KOGIES’ motion
to dismiss PGSMC’s compulsory counterclaims. At the time
PGSMC filed its Answer incorporating its counterclaims against
KOGIES, it was not liable to pay filing fees for said
counterclaims being compulsory in nature. We stress, however,
that effective August 16, 2004 under Sec. 7, Rule 141, as
amended by A.M. No. 04-2-04-SC, docket fees are now
required to be paid in compulsory counterclaim or cross-claims.
NOTE: NO LONGER GOOD LAW BECAUSE OF OCA
CIRCULAR. Docket fees are now required to be paid in
compulsory counterclaim or cross-claim.
PERKIN ELMER SINGAPORE PTE LTD V DAKILA TRADING
CORPORATION
FACTS
• Perkin Elmer Singapore Pte Ltd (Petitioner) is a
corporation from Singapore NOT considered as a foreign
corporation doing business in the PH.
• Dakila Trading Corporation (Respondent) is a
Philippine corporation engaged in the business of selling and
leasing out laboratory instrumentation, process control
instrumentation and trading of laboratory chemicals and
supplies.
• Respondent entered into a Distribution Agreement
with Perkin-Elmer Instruments Asia Pte Ltd (PEIA), a
Singapore corporation manufacturing, producing, selling or
distributing laboratory/analytical instruments with the ff. terms:
o PEIA appointed Respondent as sole distributor in the
PH, with right to purchase and sell PEIA products and subject
to a commission for sales.
o Respondent was to order products of PEIA either
from PEIA itself or from Perkin-Elmer Instruments (Philippines)
Corporation (PEIP), an affiliate of PEIP involved in wholesale
of scientific, biotechnical, and analytical instruments and
appliances. PEIA allegedly owned 99% shares of PEIP
• PEIA unilaterally terminated the Distribution
Agreement. Respondent filed before RTC of Mandaluyong a
Complaint for Collection of Sum of Money and Damages with
Prayer for Issuance of Writ of Attachment against PEIA and
PEIP
• Respondent filed Ex Parte Motions for Issuance of
Summons and for Leave of Court to Deputize Respondent’s
General Manager Richard Tee to serve summons outside of
the PH. This was granted by RTC. Alias Summons was issued
to PEIA. Summons was served on Perkin Elmer Asia, sole
proprietorship owned by Perkin Elmer Singapore Pte Ltd
(Petitioner), allegedly separate and distinct from PEIA
• PEIP moved to dismiss on ground that complaint
states no cause of action
• Perkin Elmer Asia wrote RTC and respondent about
wrongful service of summons upon them.
• Respondent filed Ex Parte Motion to Admit Amended
Complaint claiming PEIA had become a sole proprietorship
owned by Petitioner and changed its name to Perkin Elmer
Asia. Amended Complaint was to change the name of PEIA to
that of Petitioner. RTC admitted amended complaint.
• Respondent filed Motion for Issuance of Summons
and for Leave of Court to Deputize Respondent’s General
Manager Richard Tee to Serve Summons outside of the PH.
General Manager went to SG and served summons on
Petitioner
• RTC denied Motion to Dismiss of PEIP
• Petitioner filed with RTC Special Appearance and
Motion to Dismiss on the ff. grounds:
1. RTC did not acquire jurisdiction over the person of the
petitioner
2. Respondent failed to state cause of action against
petitioner because it is not the real party in interest
3. Assuming arguendo that case was correctly filed,
Distribution Agreement which was the basis of claim grants
PEIA right to terminate at any time
4. Venue improperly laid
• RTC denied Motion to Dismiss of Petitioner
o Respondent alleges Petitioner owns shares of stocks
in PEIP and reveals that there is also an allegation of personal
property in the PH. Shares of stock represent personal
property.
o Even though Amended Complaint is primarily for
damages, it relates to property of Petitioner to which it claims
interest or an actual or contingent lien making it fall under
Extraterritorial service under Rule 14.15. Service of Summons
was VALID.
o MTD was for failure to state Cause of Action. MTD
hypothetically admits the truth of the facts alleged in the
complaint.
 When MTD is under this ground, it can only be
determined from the facts alleged in the complaint and cannot
consider matters aliunde. Issue must be passed upon on basis
of allegations otherwise, procedural error or denial of due
process would result.
 All essential elements of Cause of Action are present
o Stipulation as to venue of prospective action does not
preclude the filing of the suit in the residence of Respondent
under Rule 4.2
o Full blown trial is necessary
• Petitioner filed Petition for Certiorari under Rule 65
with TRO and or Preliminary Injunction with CA. CA affirmed
RTC
1. W/N service of summons was proper and RTC acquire
jurisdiction over the person of the Petitioner – NO, there was
no valid summons served upon petitioner and RTC
erroneously exercised jurisdiction over its person
Petitioner:
• Case involves action for collection of sum of money
and damages arising from the alleged breach of the
Distribution Agreement (in personam)
• Personal service is proper and not extraterritorial
service of summons which is only proper in in rem and quasi in
rem cases
• Allegations in the Amended Complain that petitioner
has personal properties in the PH does not make this case one
that relates to, or the subject of which is, property within the
Philippines to warrant extraterritorial service.
o For this to be considered as one that relates to, or the
subject of which is property within the Philippines, the main
subject matter of the action must be property within the PH
itself.
• Prayer in the Amended Complaint for issuance of writ
of attachment over personal property of PEIP (99% owned by
Petitioner as the supposed successor of PEIA) did not convert
it to quasi in rem.
• Service of Summons is NOT valid, RTC has no
jurisdiction
SC:
• For the court to have authority to dispose of the case
on the merits, it must acquire jurisdiction over the subject
matter and the parties. Courts acquire jurisdiction over the
plaintiffs upon the filing of the complaint. Courts acquire
jurisdiction over the defendants either through service of
summons as required by law or through voluntary appearance
and submission to authority of the courts. Proper service of
summons depends on the nature of the civil case: whether in
personam, in rem or quasi in rem
• When the defendant or respondent does not reside
and is not found in the Philippines and the action involves in
personam, Philippine courts cannot try the case against them
because of impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court
• Rule 14.15 requires not mere allegation of existence
of personal property belonging to non-resident defendant but
that the personal property located in the PH must have been
actually attached. Respondent’s allegation that petitioner had
personal property in the PH in the form of shares of stock in
PEIP does not convert the case from in personam to in rem.
o Venturanza v CA: when attachment was void from the
beginning, the action in personam was never converted to in
rem
o Respondent’s prayer in its amended complaint for
issuance of writ of attachment over shares of stock in PEIP
was DENIED, shares of stock in PEIP had NOT been atttached
• Extraterritorial service of summons is not valid
because the case involves collection of sum of money and
damages, action in personam which is neither related nor
connected to any property of petitioner to which it claims lien or
interest.
• Petitioner did not voluntarily appear or submit to the
court’s authority as it was consistent in all its pleadings
assailing service of summons and jurisdiction of the RTC, thus
it is not in estoppel when it filed an Answer with compulsory
counterclaim. It had no other choice but to file an answer
otherwise RTC would have declared petitioner to waive its right
to file responsive pleadings. Compulsory counterclaim cannot
be considered as voluntary appearance. Petitioner only sought
damages and atty’s fees as a consequence of the unfounded
suit filed by respondent. Compulsory counterclaim is consistent
with position on RTC’s lack of jurisdiction
• While RTC has no jurisdiction over respondent’s
complaint, it has jurisdiction over the counterclaim as it can be
treated as a separate action.
• Although other grounds for Motion to Dismiss was
raised by petitioner, it is not voluntary appearance.
o De Midgely held that MTD with grounds other than
lack of jurisdiction over the person of the defendant with prayer
for “other reliefs” is voluntary appearance
o De Midgely is superseded by La Naval Drug
Corporation v CA: estoppel by jurisdiction must be unequivocal
and intentional.
o Allegation of grounds other than lack of jurisdiction
over the person of the defendant with prayer for “other reliefs”
is NOT considered as unequivocal and intentional estoppel.
Rule 14.20 Voluntary appearance - last sentence
2. W/N cause of action exists against Petitioner in
Respondent’s Amended Complaint - YES
Petitioner:
• CA should have granted their petition for certiorari on
ground of GAD of RTC in refusing to dismiss Amended
Complaint for failure to state cause of action
• Never used name of PEIA as its corporate name and
did not change its name from that of PEIA
• PEIA is entirely different corporate entity
• Assuming arguendo that petitioner is real party in
interest or that they are one and the same entity, still failed to
state cause of action because the Distribution Agreement
expressly grants PEIA right to terminate contract at any time
SC:
• RTC was correct: When a motion to dismiss is
grounded on failure to state a cause of action, ruling there
should be based solely on the facts alleged in the complaint,
assuming them to be true otherwise procedural error and
denial of plaintiff’s right to due process would result.
• There are exceptions to the rule but none of the
exceptions apply in this case.
• Defense of petitioner that it was not a real party in
interest is evidentiary and must be proven in trial
3. W/N venue is proper for Respondent’s civil case against
petitioner - YES
Petitioner:
• Both Respondent and PEIA mutually agreed in the
Distribution Agreement to the exclusive jurisdiction of courts of
Singapore or Philippines as elected by PEIA. Absent any
waiver from PEIA, Complaint filed by Respondent before RTC
in the Philippines should be dismissed for improper venue
SC:
• Despite venue stipulation in the Distribution
Agreement, RTC of the PH cannot be considered as improper
venue as the stipulation of venue was alternative
• Civil Case is dismissible for RTC never acquired
jurisdiction over the person of the petitioner
GSIS v CABALLERO
FACTS:
Fernando and his wife, Sylvia Caballero, secured a mortgage
secured by their residential lot from petitioner Government
Service Insurance System (GSIS) in the amount of P20,000.00.
However, Fernando defaulted on the payment of his loan with
the GSIS. GSIS wrote a letter to Fernando, informing him of
the consolidation of title in its favor, and requesting payment of
monthly rental in view of Fernando's continued occupancy of
the subject property. Negotiation as to repurchase also takes
place.
GSIS scheduled the subject property for a 2nd public bidding
after a failed negotiation with Fernando to buy back his
property. In this bidding, Jocelyn Caballero, Fernando’s
daughter submitted a bid but unfortunately defeated by CMTC.
With this, Fernando, filed with the Regional Trial Court (RTC)
of Kabacan, Cotabato a Complaint against CMTC, the GSIS
and its responsible officers Fernando prayed, among others,
that judgment be rendered: declaring GSIS Board of Trustees
Resolution No. 199, dated May 16, 1989, null and void for the
irregularities in the conduct of the bidding.
GSIS and its officers filed their Answer with Affirmative
Defenses and Counterclaim. GSIS alleged that Fernando owed
of P130,365.81, representing back rentals, including additional
interests from January 1973 to February 1987, and the
additional amount of P249,800.00. Caballero, on the other
hand, alleged that GSIS's counterclaim is permissive and its
failure to pay the prescribed docket fees results into the
dismissal of its claim.
After trial, the RTC, in its Decision, 1994, ruled in favor of GSIS
and dismissed the complaint. In the same decision, the trial
court granted GSIS's counterclaim and directed Fernando to
pay GSIS the rentals paid by CMTC in the amount of
P249,800.00.
ISSUE:
Whether or not the CA committed an error of law in holding
that GSIS’s counterclaim of rentals collected by the Caballero’s
against CMTC is in the nature of a permissive counterclaim
which required the payment of GSIS of docket fees before the
Trial Court can acquire jurisdiction over the said counterclaim.
HELD
YES. The test was also established by the Supreme Court in
this case to determine whether a counterclaim is compulsory or
not. The Court has devised the following tests: (a) Are the
issues of fact and law raised by the claim and by the
counterclaim largely the same? (b) Would res judicata bar a
subsequent suit on defendant's claims, absent the compulsory
counterclaim rule? (c) Will substantially the same evidence
support or refute plaintiff's claim as well as the defendant's
counterclaim? and (d) Is there any logical relation between the
claim and the counterclaim? A positive answer to all four
questions would indicate that the counterclaim is compulsory.
Tested against the above-mentioned criteria, the SC agreed
with the CA's view that GSIS's counterclaim for the recovery of
the amount representing rentals collected by Fernando from
the CMTC is permissive. The evidence needed by Fernando to
cause the annulment of the bid award, deed of absolute sale
and TCT is different from that required to establish GSIS's
claim for the recovery of rentals.
The issue in the main action, i.e., the nullity or validity of the
bid award, deed of absolute sale and TCT in favor of CMTC, is
entirely different from the issue in the counterclaim, i.e.,
whether GSIS is entitled to receive the CMTC's rent payments
over the subject property when it (GSIS) became the owner of
the subject property by virtue of the consolidation of ownership
of the property in its favor.
The rule in permissive counterclaims is that for the trial court to
acquire jurisdiction, the counterclaimant is bound to pay the
prescribed docket fees. This, GSIS did not do, because it
asserted that its claim for the collection of rental payments was
a compulsory counterclaim. Since petitioner failed to pay the
docket fees, the RTC did not acquire jurisdiction over its
permissive counterclaim. The judgment rendered by the RTC,
insofar as it ordered Fernando to pay GSIS the rentals which
he collected from CMTC, is considered null and void. Any
decision rendered without jurisdiction is a total nullity and may
be struck down at any time, even on appeal before this Court.
RULE 6
Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
(fourth, etc.)-party complaint, or complaint-in-intervention.
The defenses of a party are alleged in the answer to the
pleading asserting a claim against him.
An answer may be responded to by a reply. (n)
Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
(fourth, etc.)-party complaint, or complaint-in-intervention.
The defenses of a party are alleged in the answer to the
pleading asserting a claim against him.
An answer may be responded to by a reply. (n)
RULE 9
Section 2. Compulsory counterclaim, or cross-claim,
not set up barred. — A compulsory counterclaim, or a cross-
claim, not set up shall be barred. (4a)
RULE 11
Section 4. Answer to counterclaim or cross-claim. — A
counterclaim or cross-claim must be answered within ten (10)
days from service. (4)
Section 8. Existing counterclaim or cross-claim. — A
compulsory counterclaim or a cross-claim that a defending
party has at the time he files his answer shall be contained
therein. (8a, R6)
Section 9. Counterclaim or cross-claim arising after
answer. — A counterclaim or a cross-claim which either
matured or was acquired by a party after serving his pleading
may, with the permission of the court, be presented as a
counterclaim or a cross-claim by supplemental pleading before
judgment. (9, R6)
Section 10. Omitted counterclaim or cross-claim. —
When a pleader fails to set up a counterclaim or a cross-claim
through oversight, inadvertence, or excusable neglect, or when
justice requires, he may, by leave of court, set up the
counterclaim or cross-claim by amendment before judgment.
(3, R9)
TORRES V CA
The principal issue in this case is: Could the cross-claim in this
particular action stand after the complaint in the same action
was dismissed with prejudice?
In the resolution of this issue the following considerations are
pertinent:chanrobles virtual law library
(1) A cross-claim, as defined in Section 7 of Rule 6 is
"any claim by one party against a co-party arising out of the
transaction or occurrence that is the subject matter either of
the original action or of a counterclaim therein."
(2) The cross-claim of the Laicos against the Chivis was
for the recovery of the sum of P51,294.00, upon the allegations
that according to the contract of sale between them, "should
the defendants Chivi fail to transfer the title to the land in
question to the VENDEE (defendant Laico) then the former
shall return to the latter (the aforesaid sum) which is double the
amount of the purchase price received by the defendants
Chivi;" and that "the defendants Chivi are/or will be liable on
these warranties and conditions should the plaintiffs (Sierras)
finally obtain favorable judgment in their favor" (sic).
(3) When Marta B. Chivi sold her "rights and interests" to
the land in question to the Laicos on 24 May 1958 the latter
knew that Chivi had yet no registered title, and in fact
substituted her in the registration proceeding which she had
initiated.
(4) In their counterclaim for damages against the Sierras
in Civil Case No. 6184, the Laicos alleged that the "plaintiffs, in
fraudulently misrepresenting to the defendants Chivi, as well
as to the defendants Laico, that the land in question is
unregistered and is not covered by a patent, thereby inducing
the latter to purchase the land in question, which they would
not have done had they known that the land is covered by a
patent, should be adjudged to pay ..."
(5) The warranty undertaken by Marta B. Chivi, judging
by its terms and by the surrounding circumstances was in
respect of the transfer of ownership - not of the registered title -
to the Laicos. The action filed by the Sierras was not for
recovery of such ownership but for the exercise of their alleged
right of repurchase under the Public Land Act on the ground
that the land they had sold was covered by a patent title. In
other words, the filing of the action did not militate against the
warranty to transfer title, for the very fact that the plaintiffs
wished to enforce their alleged right of repurchase was
predicated on the assumption that the title, that is, ownership,
had been effectively transferred first to Chivi an subsequently
by the latter to the Laicos.
(6) In any event, even viewing the situation in the light
most favorable to the Laicos, their cross-claim on Chivi's
warranty to deliver title to them was so inextricably linked with
and so utterly dependent upon the success of the complaint of
the Sierras for the repurchase of the land that when the
complaint was dismissed the cross-claim could not possibly
survive. For as the cross-claimants themselves alleged, the
cross-defendants would be liable on the warranty "should the
plaintiffs finally obtain favorable judgment in their favor" (sic).
The warranty became functus oficio after the Sierras, who
turned out after all to have a free patent title to the land issued
way back in 1932, agreed to transfer and did transfer said title
to the Laicos - first by the deed of sale executed directly in their
favor by the Sierras on January 17, 1960, and again in the
amicable settlement of the case between them. The fact that
the Laicos paid P10,000.00 to the Sierras in that amicable
settlement created no liability on the part of the Chivis: first,
because the latter neither knew nor consented to such
settlement; second, because the Laicos had already acquired
the land directly, from the Sierras by virtue of the aforesaid
sale of January 17, 1960; and third because the said sum of
P10,000.00 was not the subject of the cross-claim against
them.
Apropos is the following statement of the legal principle:
A cross-bill strictly speaking is one brought by a defendant in
an equity suit against ... other defendants in the same suit,
touching the matters in question in the original bill. It is
considered as an auxiliary suit dependent upon the original bill,
and can be sustained only on matters growing out of the
original bill. There is a well-defined distinction between a cross-
bill merely defensive in character, and one seeking affirmative
relief. The dismissal of the original bill carries with it a purely
defensive cross-bill but not one seeking affirmative relief.
The cross-claim in this case was purely defensive in nature. It
arose entirely out of the complaint and could prosper only if the
plaintiffs succeeded. Hence, under the principle above
enunciated, it could not be the subject of independent
adjudication once it lost the nexus upon which its life depended.
Under the circumstances above set forth the dismissal of the
cross-claim should have followed the dismissal of the
complaint as a matter of course, without further proceeding;
and in setting the said cross-claim for pre-trial and receiving
evidence thereon and then rendering judgment against the
cross-defendants the court committed such a grave abuse of
discretion amounting to lack of jurisdiction correctible by
certiorari.
Concerning the argument that the respondents here were
guilty of laches because they filed their petition for certiorari
after the lapse of over 9 months from the time judgment of the
Court of First Instance was rendered, respondent Court of
Appeals ruled - in our opinion correctly - as follows:
To the contention that the petitioners' action is barred laches,
we are bound to disagree. The judgment by default was
rendered on February 5, 1965. It is not known when the
petitioners received copy of this judgment, but the fact is that
on April 13, or after the lapse of only 2 months and 7 days from
rendition of the judgment, the petition for certiorari was filed
with this Court. Principally, the petition assails the decision and
the writ of execution thereof which was issued on April 1.
Assuming that the decision complained of was actually
received by the petitioners on the date it was rendered, the
intervening period to the filing of the petition is only 2 months
and 7 days, which is shorter than the shortest period of 2
months and 26 days cited in the respondents' ex-parte motion
for reconsideration in support of their theory of laches. And a
mere 12 days intervened between the issuance of the writ of
execution and the filing of the petition for certiorari.
Parenthetically, this Court would like to state that Judge
Guillermo Torres should not have been made to appear as
active party-petitioner in this case, his participation having
become functus oficio after the rendered judgment, and
therefore his role being purely nominal in this petition.
In view of the foregoing considerations, the judgment of the
Court of Appeals is affirmed, without pronouncement as to
costs.
RUIZ v CA
Facts: On September 12, 1976, the Crisologo family donated
an island to the Sent of God Foundation on the condition inter
alia that it would "be used exclusively to provide a monastic life
and experience according to the Rule of St. Benedict and for
such other religious and charitable purposes as may be
determined by the donee." This was followed by a later
donation of other lands, under the same conditions. The
subject properties were later transferred by the Foundation to
the S of G Foundation Inc., which introduced improvements
thereon that, for reasons we do not need to examine here, it
later demolished. On July 29, 1988, believing that the
conditions of the donations had been violated, the Crisologos
filed a complaint for revocation of the donations and the
recovery of the properties donated. 1 Impleaded as defendants
were the Sent of God Foundation, the S of G Foundation, Inc.,
Raul G. Fores, Senen F. Valero, and Father Odon de Castro,
the last three as officers of the foundations. Also included were
Olegario Orbeta and his wife, Susana Rosario Orbeta, for their
role in facilitating the donations.
Defendants resisted the allegations in the complaint and
denied that the conditions of the donations had been violated.
2 For their part, the Orbeta spouses confessed judgment in
their answer but also filed a cross-claim for damages against
the other defendants for involving them in the litigation.
The other defendants filed a motion to dismiss the complaint
on the ground that it did not state a cause of action and that
only the S of G Foundation was a real party-in-interest. The
trial court issued an order 4 dismissing the complaint for lack of
a cause of action.
The Orbeta spouses, who had not joined the Crisologos in CA-
GR No. 16837, filed their own petition for certiorari, also with
the Court of Appeals. Docketed as CA-GR No. 17013, this
petition prospered. On September 28, 1990, the respondent
court annulled the dismissal of the complaint by the trial court
and ordered its reinstatement.
Issue: WON Orbeta spouses, as cross-claimants in the original
complaint, could still appeal its dismissal in their petition for
review
NO. The most important reason is that the order of dismissal
issued by the trial court had already become final and
executory at the time it was sought to be reversed. The
reglementary period for appealing it had already lapsed when
the Crisologos filed their petition for certiorari under Rule 65.
This was correctly dismissed by the Court of Appeals on the
ground, as earlier stated, that the special civil action was not a
substitute for a lost appeal.
When the Orbetas filed their own petition on March 6, 1989, it
was also after the order they were questioning had already
become unappealable. On this score alone, the present
petition must fail. Even as the petition of the plaintiffs
themselves had been earlier dismissed, similar treatment
should have been given to the petition of the Orbetas, who
were appealing only as cross-claimants.
A cross-claim is any claim by one party against a co-party
arising out of the transaction or occurrence that is the subject
matter either of the original action or of a counter-claim therein.
Such cross-claim may include a claim that the party against
whom it is asserted is or maybe liable to the cross-claimant for
all or part of a claim asserted in the action against the cross-
claimant. 7
The cross-claim in this case stemmed from the alleged unjust
refusal of the donees to return the donated properties, resulting
in the Crisologos filing their complaint for revocation of the
donations. In their cross-claim, the Orbetas alleged that they
were dragged into the controversy because of the conduct of
the petitioners. Their contention was that they would not have
been sued at all were it not for the failure of the petitioners to
comply with the conditions of the donations.
It is clear that the cross-claim arose from the complaint of the
Crisologos and was not separable from that main action. It had
no independent existence and was based entirely on that
complaint. The cross-claim was defensive in character
because it could prosper only if the plaintiffs succeeded. As the
plaintiffs failed to establish that the petitioners' refusal was not
justified, it necessarily followed that the private respondents'
own cross-claim, which was based on the same allegation,
also had to fail.
The cross-claimants cannot claim more rights than the plaintiffs
themselves, on whose cause of action the cross-claim
depended. The dismissal of the complaint divested the cross-
claimants of whatever appealable interest they might have had
before and also made the cross-claim itself no longer viable.
TAN v DIMAYUGA
Facts: Soledad Tan filed with the court of First Instance of
Rizal, suit for damages against Carlos Dimayuga, as a result of
physical injuries sustained by her while being a passenger of a
Circle taxicab owned by the latter. Dimayuga filed a motion for
leave to file a third party complaint, bringing in as third party
defendant Walter Mason, whose car driven by him had a
collision with the aforesaid taxicab that caused the injuries
sustained by Soledad Tan. Summons were served to Tan.
Mason filed a "Motion to Dismiss the Third Party Complaint,"
containing a request to "set it for the consideration of the court
on January 11, or as soon as the court minded to entertain the
same."
Dimayuga filed a motion to declare third party defendant
Walter Mason in default, on the alleged ground that the
reglementary period of fifteen days within which he should file
his answer to the third party complaint had already expired and
he had not yet filed his answer thereto. Acting on this motion,
and still unaware of Mason's motion to dismiss, the court, on
January 14, 1958, issued an order declaring him in default.
Soledad Tan, with leave of court, filed an amended complaint
containing an alternative prayer for judgment in her favor and
against either defendants Dimayuga or Mason.
Mason filed his answer to the amended complaint, including
therein a counterclaim against Soledad Tan, a cross-claim
against Carlos Dimayuga, and a third party complaint against
Vicente Escalona, the driver of the taxicab owned by
Dimayuga. On the following day, realizing that he had filed a
third party complaint against Escalona without court permission,
Mason filed a motion for leave to file said pleading. The motion
was granted.
Dimayuga filed two motions: (1) to strike out Mason's for
motion for leave to file third party complaint; and (2) to dismiss
the cross-claim filed against him, which were granted.
ISSUE: WON Mason’s cross claim should be dismissed
YES. It must be remembered, in the first place, that the order
of default was rendered on January 14, 1958. For its setting
aside, defendant-appellant's remedy should have been a
petition for relief under Rule 38 of the Rules of Court, filed
within sixty days after he learned of the order and not more
than six months after such order was entered (section 3). The
record, however, discloses that there was no such petition for
relief filed, but that the first time Mason made prayer to set
aside the default order was on December 16, 1958 in his
"Petition and Motion for Reconsideration" of the order quoted
above. Even granting for the sake of argument that this petition
should be regarded as one for relief, still the order of default
could no longer be reopened because said petition was filed
eleven months after the entry of said order, clearly beyond the
reglementary period provided for under section 3 of Rule 38.
Having thus neglected to have the order of default vacated,
appellant lost every right to expect that his motion to dismiss
Dimayuga's third party complaint would be acted upon by the
lower court. Furthermore, there is showing that Mason was
somewhat heedless about the said motion of January 3, 1958.
As already stated, it contained a request to set it for hearing.
Dimayuga, with his lawyer, appeared in court on that date,
January 11, but neither Mason nor his attorney appeared. A
search in the record by the clerk of court and Dimayuga's
lawyer revealed no pleading, or motion coming from Mason.
From these allegations, it would appear that Mason did not see
to it that his pleading has reached the court. If he were sincere
in asking that his motion to dismiss be considered or heard on
January 11, 1958, he or counsel should have appeared in
court on that very date, for the proposed hearing, or at least to
find out if the motion was already with the court.
Consequently, the lower court did not commit a mistake in
dismissing Mason's cross-claim contained in his answer
whereby Dimayuga was cross-defendant. It is worthy note that
said cross-claim was filed after the appellant was declared in
default. As correctly pointed out by the lower court, to allow the
cross-claim to remain would be tantamount to setting aside the
order of default the cross-claimant, who had been previously
declared default, would re-obtain a standing in court as party
litigant.
Rule 6, ROC
Section 11. Third, (fourth, etc.)—party complaint. — A
third (fourth, etc.) — party complaint is a claim that a defending
party may, with leave of court, file against a person not a party
to the action, called the third (fourth, etc.) — party defendant
for contribution, indemnity, subrogation or any other relief, in
respect of his opponent's claim.
RSP
Sec. 19. Prohibited pleadings and motions. — The following
pleadings, motions or petitions shall not be allowed in the
cases covered by this Rule: chanrobles virtual law library
(a) Motion to dismiss the complaint or to quash the complaint
or information except on the ground of lack of jurisdiction over
the subject matter, or failure to comply with the preceding
section;
(b) Motion for a bill of particulars;
(c) Motion for new trial, or for reconsideration of a judgment, or
for opening of trial;
(d) Petition for relief from judgment;
(e) Motion for extension of time to file pleadings, affidavits or
any other paper; chanrobles virtual law library
(f) Memoranda;
(g) Petition for certiorari, mandamus, or prohibition against any
interlocutory order issued by the court;
(h) Motion to declare the defendant in default; chanrobles
virtual law library
(i) Dilatory motions for postponement;
(j) Reply;
(k) Third party complaints;
(l) Interventions.
RSC
SEC. 14. Prohibited Pleadings and Motions. — The following
pleadings, motions,
or petitions shall not be allowed in the cases covered by this
Rule:
(a) Motion to dismiss the complaint;
(b) Motion for a bill of particulars;
(c) Motion for new trial, or for reconsideration of a judgment, or
for
reopening of trial;
(d) Petition for relief from judgment;
(e) Motion for extension of time to file pleadings, affidavits, or
any other
paper;
(f) Memoranda;
(g) Petition for certiorari, mandamus, or prohibition against any
interlocutory order issued by the court;
(h) Motion to declare the defendant in default;
(i) Dilatory motions for postponement;
(j) Reply;
(k) Third-party complaints; and
(l) Interventions.
REPUBLIC V CENTRAL SURETY
Facts: Republic of the Philippines (hereinafter referred to as
the Republic) filed suit against the Central Surety & Insurance
Company (hereinafter referred to as the Surety) and the latter's
manager of the bond department, Casimiro Mangoba. The
Surety executed in favor of the Deportation Board a bond in
the amount of P5,000 for the temporary release of Po Kee
Kam, a Chinese citizen and respondent in deportation
proceeding No. 730, subject to certain conditions, principal
among which are that the Surety undertakes to have Po Kee
Kam available at all times to the Deportation Board within 24
hours from notice, that Po Kee Kam shall be personally
present before the Deportation Board at all hearings in the
case, and that upon his failure to comply with any of the above
conditions, the bond shall be automatically confiscated and
forfeited in favor of the Government. Po Kee Kam failed to
appear. Prayer is made that judgment be rendered sentencing
the Surety and Mangoba to pay, jointly and severally, to the
Republic the amount of P5,000, with interest at the legal rate
from the filing of the complaint until full payment, and the sum
of P1,000 as attorney's fees and litigation expenses, plus costs.
Surety filed its answer, interposing inter alia, the defenses (1)
that its bond cannot be made liable beyond the amount of
P5,000; (2) that it is not liable for attorney's fees in the absence
of any stipulation to that effect; (3) that the court has no
jurisdiction over the case as the amount involved is only
P5,000; and (4) that the Republic has no cause of action.
Mangoba's answer, filed on July 11, 1963, makes substantially
the same averments and interposes the same defenses as
those contained in the Surety's answer. In addition, he
disclaims personal liability under the bond.
On July 30, 1963 the Surety filed a third-party complaint, with
leave of court, against Po Kee Kam and Tony Go (hereinafter
referred to as the third-party defendants), alleging that the
Republic filed a complaint against it on the basis of a surety
bond in the amount of P5,000 issued in behalf of Po Kee Kam
in favor of the Deportation Board; that for and in consideration
of the issuance of the said bond, the third-party defendants,
jointly and severally, executed an indemnity agreement in favor
of the Surety to indemnify it for damage, loss, costs, payments,
advances and expenses of whatever kind and nature which it
might at any time incur as a consequence of having executed
the said bond. Prayer is made that in the event judgment is
rendered against it, the third party defendants be ordered,
jointly and severally, to reimburse it whatever amount it may be
adjudged to pay to the Republic, plus interest at the rate of 12%
per annum, compounded quarterly, from the filing of the
complaint until the whole obligation is fully paid, 15% of the
total amount due as attorney's fees, and costs.
Trial court rendered judgment, ordering the surety to pay to the
Republic the sum of P5,000, with interest thereon at the legal
rate from the date of the filing of the complaint until the whole
amount shall have been paid, plus costs, and absolving
Mangoba from the complaint.
WON Surety is liable for the bond
YES. Evidence unequivocally shows that the Surety received
notice to produce the person of Po Kee Kam; in point of fact
the Surety even orally moved "for the postponement of the
production of respondent Po Kee Kam," which motion was
denied in the order of December 14, 1962 of the Deportation
Board. It would have been pointless to ask for postponement to
produce the person of Po Kee Kam, if the Surety did not
receive notice to that effect. At all events, the trial court found
that the Surety and Mangoba "were duly notified to produce the
said Po Kee Kam before the Deportation Board on December
14, 1962, but the said Po Kee Kam failed to appear."
WON Court had jurisdiction
YES. It is not disputed that the trial court acquired jurisdiction
over the subject-matter on June 20, 1963 when the complaint
was filed with it. It is of no moment that summons was served
and that the case was heard and decided after the effectivity of
Republic Act 3828, because the rule is firmly entrenched in our
law that jurisdiction once acquired continues until the case is
finally terminated.
rd
WON Court had jurisdiction over the 3 party complaint
YES. Third-party complaint is an ancillary suit which depends
on the jurisdiction of the court over the main action. Since the
trial court had acquired jurisdiction over the complaint, it
necessarily follows that it likewise had jurisdiction over the
third-party complaint which is but an incident thereof. This must
be so because jurisdiction over the main case embraces all
incidental matters arising therefrom and connected therewith.6
A contrary rule would result in "split jurisdiction" which is not
favored,7 and in multiplicity of suits, a situation obnoxious to
the orderly administration of justice.8 The court acquired
jurisdiction over the third-party complaint, provided it had
jurisdiction over the main case, for the reason that the third-
party complaint is but a continuation thereof, its purpose being
to seek "contribution, indemnity, subrogation or any other relief,
in respect to his opponent's claim."
NOTE: The Surety prays for the remand of the third-party
complaint to the trial court for further proceedings. It is our view
that under the environmental circumstances, there is no need
to do so. The third-party defendants did not specifically deny
the execution of the indemnity agreement. They merely
expressed insufficient knowledge and information to form a
belief as to the veracity thereof, without setting forth "the
substance of the matters" upon which they rely to support their
denial as required by the Rules.
SAMALA V VICTOR
Facts: Emerita C. Jumanan, assisted by her husband Ricardo
Jumanan, filed before the CFI of Cavite a complaint for
damages arising from physical injuries suffered by her as a
passenger of the jeepney bearing plate No. PUJ-VY-542 '75
allegedly owned and operated by the four-named defendants,
spouses Felisa and Tomas Garcia, Emetiquio M. Jarin and
Juanita Madlangbayan, and driven by the last named
defendant, Virgilio Profeta.
In their separate answers, both Jarin and Madlangbayan
denied liability, claiming they no longer owned the passenger
jeepney at the time of the incident in question, said ownership
having been transferred to the spouses Garcia. While admitting
to be the owners of the passenger jeepney, the spouses
Garcia nonetheless denied liability, alleging that the vehicular
collision complained of was attributable to the fault and
negligence of the owner and driver of the Saint Raphael
Transit passenger bus with plate No. XGY-297 PUB- Phil. '75.
Consequently, a third-party complaint was filed by defendants
spouses Garcia and Virgilio Profeta against Purificacion
Samala and Leonardo Esguerra, owner and driver,
respectively, of the Saint Raphael Transit Bus. The latter
defendants, in turn, filed a fourth-party complaint against the
insurer of the Saint Raphael Transit Bus, Imperial Insurance,
Inc., which was declared in default for failure to appear at the
pre-trial conference.
Trial court ruled in favor of defendants.
WON third-party complaint may not prosper
NO. A person not a party to an action may be impleaded by the
defendant either (a) on an allegation of liability to the latter; (b)
on the ground of direct liability to the plaintiff-, or, (c) both (a)
and (b). The situation in (a) is covered by the phrase "for
contribution, indemnity or subrogation;" while (b) and (c) are
subsumed under the catch all "or any other relief, in respect of
his opponent's claim."
The case at bar is one in which the third party defendants are
brought into the action as directly liable to the plaintiffs upon
the allegation that "the primary and immediate cause as shown
by the police investigation of said vehicular collision between
(sic) the Above-mentioned three vehicles was the recklessness
and negligence and lack of imprudence (sic) of the third-party
defendant Virgilio (should be Leonardo) Esguerra y Ledesma
then driver of the passenger bus." The effects are that "plaintiff
and third party are at issue as to their rights respecting the
claim" and "the third party is bound by the adjudication as
between him and plaintiff." It is not indispensable in the
premises that the defendant be first adjudged liable to plaintiff
before the third-party defendant may be held liable to the
plaintiff, as precisely, the theory of defendant is that it is the
third party defendant, and not he, who is directly liable to
plaintiff. The situation contemplated by appellants would
properly pertain to situation (a) above wherein the third party
defendant is being sued for contribution, indemnity or
subrogation, or simply stated, for a defendant's "remedy over".
It is immaterial that the third-party plaintiff asserts a cause of
action against the third party defendant on a theory different
from that asserted by the plaintiff against the defendant. It has
likewise been held that "a defendant in a contract action may
join as third-party defendants those liable to him in tort for the
plaintiff s claim against him or directly to the plaintiff.
PHILTRANCO v PARAS
Facts: Felix Paras is engaged in the buy and sell of fish
products. Sometime on his way home to Manila from Bicol
Region, he boarded a bus owned and operated by Inland
Trailways, Inc. and driven by its driver Calvin Coner.
While the said bus was travelling, it was bumped at the rear by
another bus owned and operated by Philtranco Service
Enterprises, Inc. As a result of the strong and violent impact,
the Inland bus was pushed forward and smashed into a cargo
truck parked along the outer right portion of the highway and
the shoulder. Consequently, the said accident bought
considerable damage to the vehicles involved and caused
physical injuries to the passengers and crew of the two buses,
including the death of Coner.
Paras was not spared from the effects of the accident. He was
taken for an emergency treatment in the nearby hospital and
thereafter taken to the National Orthopedic Hospital in which
underwent several operations.
In view of financial constraints, Paras filed a complaint for
damages based on breach of contract of carriage against
Inland to which it denied responsibility, by alleging, among
others, that its driver Coner had observed an utmost and
extraordinary care and diligence to ensure the safety of its
passengers.
Upon leave of court, Inland filed a third-party complaint against
Philtranco and Apolinar Miralles (Third Party defendants). In
this third-party complaint, Inland, sought for exoneration of its
liabilities to Paras, asserting that the latter’s cause of action
should be directed against Philtranco considering that the
accident was caused by Miralles’ lack of care, negligence and
reckless imprudence. In support of it, Inland invoked the Police
Investigation Report which established the fact that the
Philtranco bus driver, Apolinar Miralles was the one which
violently bumped the rear portion of the Inland bus, and
therefore, the direct and proximate cause of Paras’ injuries.
The RTC ruled in favor of Paras and held that Philtranco and
Apolinar Miralles jointly and severally liable for actual and
moral damages including attorney’s fees.
On appeal to the CA, it affirmed the RTC’s ruling that no trace
of negligence at the time of the accident was attributable to
Inland’s driver, rendering Inland not guilty of breach of contract
of carriage.
WON Paras could recover considering that Philtranco was only
being subrogated for Inland
YES. Impleading Philtranco and its driver through the third-
party complaint filed on March 2, 1990 was correct. The device
of the third-party action, also known as impleader, was in
accord with Section 12, Rule 6 of the Revised Rules of Court,
the rule then applicable, viz:
Section 12. Third-party complaint. – A third-party complaint is a
claim that a defending party may, with leave of court, file
against a person not a party to the action, called the third-party
defendant, for contribution, indemnity, subrogation or any other
relief, in respect of his opponent’s claim.
The requisites for a third-party action are, firstly, that the party
to be impleaded must not yet be a party to the action; secondly,
that the claim against the third-party defendant must belong to
the original defendant; thirdly, the claim of the original
defendant against the third-party defendant must be based
upon the plaintiff’s claim against the original defendant; and,
fourthly, the defendant is attempting to transfer to the third-
party defendant the liability asserted against him by the original
plaintiff.
As the foregoing indicates, the claim that the third-party
complaint asserts against the third-party defendant must be
predicated on substantive law. Here, the substantive law on
which the right of Inland to seek such other relief through its
third-party complaint rested were Article 2176 and Article 2180
of the Civil Code, which read:
Article 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this chapter.
(1902a)
Article 2180. The obligation imposed by article 2176 is
demandable not only for one’s own acts or omissions, but also
for those of persons for whom one is responsible. Paras’ cause
of action against Inland (breach of contract of carriage) did not
need to be the same as the cause of action of Inland against
Philtranco and its driver (tort or quasi-delict) in the impleader. It
is settled that a defendant in a contract action may join as
third-party defendants those who may be liable to him in tort for
the plaintiff’s claim against him, or even directly to the plaintiff.
The third-party claim need not be based on the same theory as
the main claim.
Pascual v Bautista
Facts: This is an appeal taken by Mariano R. Flores from the
decision of the Court of First Instance of Manila. It appears that
in Civil Case No. 5203 of the Court, of First Instance of Manila
entitled "Wenceslao Pascual vs. Pilar Bautista, Primitivo Lovina,
Nelly Montilla de Lovina and Leon Yambao", the first (appellee
herein) filed, with leave of court, a third-party complaint against
Mariano R. Flores (appellant herein). Having failed to answer
the third-party complaint, Flores was declared in default (Rec.
on appeal, pp. 19-20, 40-41) and, after due trial of the whole
case, the court, on March 7, 1951, rendered judgment. All the
parties above-mentioned, except the third-party defendant
Flores, appealed from the above decision to the Court of
Appeals (CA-G.R. 7878-R), appellee Pilar Bautista, from the
portions thereof adverse to her and in favor of the plaintiff. In
its decision of February 16, 1953, the Court of Appeals
modified the appealed decision "by eliminating from it the
award of damages in favor of Wenceslao Pascual against Pilar
Bautista and Primitivo Lovina and Nelly Montilla de Lovina, as
solidary debtors; and substituting, in its stead, an award in
favor of Wenceslao Pascual in the total sum of P15,181.86, to
be paid by Pilar Bautista alone. In all other respects the
judgment of the Court below is affirmed. Pilar Bautista secured
the corresponding writ to execute the decision rendered in her
favor in Civil Case No. 5203 as third-party plaintiff therein
against third-party defendant Flores, but the writ was later
returned unsatisfied. Thereafter she obtained several alias
writs of execution against the same party, the latest having
been issued on April 17, 1961, but they were likewise returned
unsatisfied. On May 4, 1961, she filed a petition for the
examination under oath of her judgment debtor (Flores)
alleging that the latter had fraudulently disposed of his
properties, and, on May 18 of the same year, the court ordered
said judgment debtor to appear before it for examination under
oath.
Upon petition of Flores, however, the court, on June 24, 1961,
set aside its order for his examination as well as the writ of
execution then outstanding, on the ground that "more than ten
years had already elapsed since the judgment against third-
party defendant Mariano R. Flores and in favor of third-party
plaintiff was entered, so that no writ of execution of said
judgment can now be issued (Sec. 6, Rule 39 of the Rules of
Court)". On August 29, 1961 appellee Bautista filed a petition
for relief from said order of June 24, 1961, but the same was
denied by the court, and although on November 15, 1961 she
filed a notice of appeal from said order on denial, no appeal
therefrom appears to have been actually perfected.
The vendee (Pilar Bautista) would be entitled to recover from
the vendor (Mariano Flores) the liquidated damages and
expenses agreed upon "in the event that for any reason
whatsoever Nelly Montilla de Lovina shall refuse or fail to
execute in favor of the vendor a deed of sale covering the said
fishpond" (Emphasis supplied). Because Mrs. Lovina refused
and/or failed to execute the contemplated deed of sale the trial
court rendered the judgment by default against Mariano Flores.
That the cause of action or claim of Pilar Bautista, as third
party plaintiff, against Mariano Flores, as third party defendant,
did not depend upon the outcome of the principal action
(Pascual vs. Bautista and the Lovinas) is evident from the
nature of the claims involved therein
WON third party complaint may prosper
YES. Whether or not the filing of the third party complaint was
proper can not now be raised by, nor be invoked in favor of
Pilar Bautista, because it was she precisely who filed it.
Moreover, it is clear from the provisions of the Rules of Court
that for a claim to be properly raised in a pending action by
way of third party complaint, it is not necessary that it be one
arising from entirely dependent upon the main action; it is
enough that it be "in respect" of the claim of third party
plaintiff's opponent (Rule 6, Section 12, Rules of Court), or that
it be "connected with plaintiff's claim" (Capayas vs. Court of
First Instance of Albay 43 O.G. 2071, 2074; U.S. Commercial
Company vs. Macario Guevarra, et al., 48 O.G. pp. 612-613).
COC v Cloribel
WON respondent court gravely abused its discretion in
allowing the filing of and in admitting the third-party complaint
of the Cochingyans.
YES. Civil Case No. 52318 was a special civil action for
declaratory relief under Rule 66 of the Rules of 1940 which
were in force when it was filed. The only purpose thereof was
to secure from the court the proper interpretation or
construction of the reparations contract between the
Reparations Commission and Warvets in regard to the rate of
conversion of the dollar to the peso of the purchase price
Warvets had to pay No positive or affirmative, much less any
material relief, was 'using sought therein. Indeed, it is in the
very nature of a 'declaratory relief special civil action that "the
Relief is confined to a case of actual controversy within the
Court's jurisdiction, without the need of injunction, execution or
other relief beyond the adjudication of the legal rights which
are the subject of controversy between the parties." ( 3 Moran,
Comments on the Rules of Court, p. 146, 1970 ed.) In other
words, the plaintiff Ofilada in said case did not, as he could not
pray for anything to be award or granted to him. Now, as
regards the nature and purpose of a third-party complaint,
Section 1 of Rule 12 of the Rules of 1940 provided:
SECTION 1. Claim against one not a party to an action.
— When a defendant claims to be entitled against a person not
a party to the action, hereinafter called the third-party
defendant, to contribution, indemnity, subrogation or any other
relief, in respect of the plaintiff' claim, he may file, with leave of
court, against such person a pleading which shall state the
nature of his claim and shall be called the third-party complaint.
It is obvious from this definition that a third-party complaint is
inconceivable when the main case is one for nothing more'
than a declaratory relief. In a third-party complaint, the
defendant or third-party plaintiff is supposed to seek
contribution, indemnity, subrogation or any other relief from the
third-party defendant is respect to the claim of the plaintiff
against him. In the case at bar, what possible relief could the
Cochingyans, as defendants in Civil Case No. 52318, for
declaratory relief, have asked for by way of contribution,
indemnity, subrogation or any other relief from those they have
named third-party defendants, the Collector of Customs,
Commissioner of Customs, Reparations Commission, their co-
defendant and Macario Ofilada, the very plaintiff, in respect to
the construction or interpretation that Ofilada was asking the
court to make? At the risk of quoting again part thereof, the
complete prayer in the third-party complaint in question reads
thus:
1. Immediately upon the filing of the herein third-party
complaint this Honorable Court issue a writ of preliminary
mandatory injunction ex-parte, without notice to the other
parties, ordering the third-party defendants Commissioner of
Customs and Collector of Customs and Reparations
Commission to release immediately the third-party plaintiffs the
balance of the 202 packages of rayon clothing forming part of
the shipment of consumer goods originally consigned to the
Reparations Commission which arrived in Manila aboard the
SS GUILLERMO on September 10, 1962, and which to the
present are still under the custody and possession of the
collector of Customs and Commissioner of Customs upon the
filing of a bond by the third-party plaintiffs in such amount as
may be fixed by this Honorable Court to pay for any damages
that the third-party defendants may suffer should this
Honorable Court find that issuance of the preliminary
mandatory injunction is not proper.
2. That after hearing on the merits this Honorable Court
confirm and make final its order of mandatory preliminary
injunction.
The third-party plaintiffs further pray for such other relief as
may be just and equitable under the premises. (Pp. 87-88,
Record.)
According to Moran:
Tests of Propriety.—The test to determine whether the claim
for indemnity in a third-party complaint in respect to plaintiff's
claim is proper, are (a) whether it arises out of the same
transaction on which plaintiff's claim is based; or whether the
third-party's claim, although arising out of another or different
contract or transaction, is connected with plaintiff's claim; (U.S.
Commercial Co. v. Guevara, et al., 48 O.G. 612.) (b) whether
the third-party defendant would be liable to the plaintiff or to the
defendant for all or part of the plaintiffs claim against the
original defendant, although the third- party defendant's liability
arises out of another transaction; or (e) whether the third-party
defendant may assert any defense which the third-party
plaintiff has, or may have, against plaintiff's claim. (Capayas v.
Court of First Instance, 77 Phil. 181.) Failing these tests, the
complaint is improper. ... (1 Moran, Comments on the Rules of
Court, p. 281, 1970 ed.)
It is thus too evident to call for more elaborate discussion that
respondent court s action in allowing the filing of Cochingyans'
third-party complaint completely disregarded, due presumably
to ignorance thereof, the basic concepts of the remedies of
declaratory relief and third-party complaint.
Moreover, respondent court also paid no heed to the
requirement of Section 2 of Rule 12 of the 1940 Rules to the
effect that: "Before the service of his answer a defendant may
move ex parte or, after the service of his answer, on notice to
the plaintiff, for leave as third- party plaintiff to file a complaint
against a third-party defendant." In the present case, it is a fact
that the motions of the Cochingyans for leave to file their third-
party complaint and for the admission thereof were granted ex
parte notwithstanding that the trial of the case had already
been terminated.
RULE 10
Amended and Supplemental Pleadings
Section 1. Amendments in general. — Pleadings may
be amended by adding or striking out an allegation or the
name of any party, or by correcting a mistake in the name of a
party or a mistaken or inadequate allegation or description in
any other respect, so that the actual merits of the controversy
may speedily be determined, without regard to technicalities,
and in the most expeditious and inexpensive manner. (1)
Section 2. Amendments as a matter of right. — A party
may amend his pleading once as a matter of right at any time
before a responsive pleading is served or, in the case of a
reply, at any time within ten (10) days after it is served. (2a)
Section 3. Amendments by leave of court. — Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court. But such
leave may be refused if it appears to the court that the motion
was made with intent to delay. Orders of the court upon the
matters provided in this section shall be made upon motion
filed in court, and after notice to the adverse party, and an
opportunity to be heard. (3a)
Section 4. Formal amendments. — A defect in the
designation of the parties and other clearly clerical or
typographical errors may be summarily corrected by the court
at any stage of the action, at its initiative or on motion, provided
no prejudice is caused thereby to the adverse party. (4a)
Section 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by the
pleadings are tried with the express or implied consent of the
parties they shall be treated in all respects as if they had been
raised in the pleadings. Such amendment of the pleadings as
may be necessary to cause them to conform to the evidence
and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to amend
does not effect the result of the trial of these issues. If evidence
is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
(5a)
Section 6. Supplemental pleadings. — Upon motion of
a party the court may, upon reasonable notice and upon such
terms as are just, permit him to serve a supplemental pleading
setting forth transactions, occurrences or events which have
happened since the date of the pleading sought to be
supplemented. The adverse party may plead thereto within ten
(10) days from notice of the order admitting the supplemental
pleading. (6a)
Section 7. Filing of amended pleadings. — When any
pleading is amended, a new copy of the entire pleading,
incorporating the amendments, which shall be indicated by
appropriate marks, shall be filed. (7a)
Section 8. Effect of amended pleadings. — An
amended pleading supersedes the pleading that it amends.
However, admissions in superseded pleadings may be
received in evidence against the pleader, and claims or
defenses alleged therein not incorporated in the amended
pleading shall be deemed waived. (n)

RULE 11
Section 7. Record of pre-trial. — The proceedings in
the pre-trial shall be recorded. Upon the termination thereof,
the court shall issue an order which shall recite in detail the
matters taken up in the conference, the action taken thereon,
the amendments allowed to the pleadings, and the agreements
or admissions made by the parties as to any of the matters
considered. Should the action proceed to trial, the order shall,
explicitly define and limit the issues to be tried. The contents of
the order shall control the subsequent course of the action,
unless modified before trial to prevent manifest injustice. (5a,
R20)
PHILIPPINE AMERICAN GENERAL INSURANCE CO. AND
TAGUM V. SWEET LINES
DOCTRINES:
• Issues may accordingly be taken cognizance of by the court
even if not inceptively raised as a defense so long as its
existence is plainly apparent on the face of relevant pleadings.
• Actionable documents must be properly pleaded either as
causes of action or defenses, and the genuineness of which
are deemed admitted unless specifically denied under oath by
the adverse party.
• Failure to specifically deny the existence of actionable
documents amounts to an admission. Judicial admissions are
conclusive, no evidence being required to prove the same.
• Before an action can properly be commenced all the essential
elements of the cause of action must be in existence.
• The right of action does not arise until the performance of all
conditions precedent to the action and may be taken away by
the running of the statute of limitations, through estoppel, or by
other circumstances which do not affect the cause of action.
• Performance or fulfilment of all conditions precedent upon
which a right of action depends must be sufficiently alleged,
considering that the burden of proof to show that a party has a
right of action is upon the person initiating the suit.
EMERGENCY RECIT
Petitioner Tagum Plastics (TAGUM), from Davao, imported
polyethylene [basic plastic material] from F. E. Zuellig in
America. Co-petitioner Philippine American General Insurance
(PHILAMGEN) is its insurer. The shipment has to first arrive in
Manila before it can be interisland shipped to Davao.
Respondent Sweet Lines was hired to ferry said shipment to
Davao. Upon arrival at Davao, it was found that some of the
imported plastics were undelivered or damaged. Petitioners
filed suit on the basis of the bills of lading. Unfortunately, said
bills of lading contain prescriptive periods of sixty (60) days to
file for claims of loss/damages. It also required notice to
respondent carrier before judicial claims may be had. The bills
of lading, however, were not formally presented as evidence
during trial. The RTC ruled in favor of importer-petitioner, but
the CA reversed on the basis of prescription. The SC upheld
the CA, saying that even though the bills of lading were not
formally presented as evidence, the same were sufficiently
referred to in the pleadings of both parties. Hence, it was
deemed judicially admitted and no evidence was required to
prove its existence.
FACTS:
• Petitioners Philippine American General Insurance Co.
(PHILAMGEN) and Tagum Plastics (TAGUM) were the
insurers and importers, respectively, of an order of
polyethylene (the basic material for your common plastics).
• The polyethylenes are to be shipped from F. E. Zuellig in the
United States through an Indian ship, SS Vishva Yash, and are
to be received at Manila. After which, the subject matter is to
be shipped to Davao, TAGUM’s place of business.
• When the Indian vessel arrived at Manila, it sought the
services of respondent Sweet Lines, Inc. for the inter-island
shipment to Davao.
• However, when the M/V Sweet Love, owned and operated by
Sweet Lines, arrived at Davao, petitioners found that the some
of the imported polyethylene were undelivered or damaged.
• For this reason, petitioners filed suit against respondent
Sweet Lines and the Davao Veterans Arrastre which handled
the cargoes at the Davao port.
o The basis for such suit are the bills of lading, which serves as
the contract between parties that the goods indicated therein
are to be delivered complete in number and in the condition
specified.
o Militating against the petitioners, however, is the prescriptive
period included in the bills of lading. It states that any action
arising from shortage or damages must be brought within sixty
(60) days from accrual of right of action.
o Also, notice of claims for loss or damages is required to be
given to the carrier before the institution of judicial claims.
• The bills of lading were not formally offered as evidence;
hence it was not shown that a contractual prescriptive period
was indicated therein.
• The Trial Court ruled in favor of petitioners PHILAMGEN and
TAGUM, but the CA reversed on the basis of prescription.
Hence, this petition for review on certiorari.
ISSUES:
1. Whether or not the CA correctly ruled on the basis of
prescription even without formal evidence of its existence.
2. Assuming arguendo that a prescriptive period exists in the
contract, on not finding such as null and void for being contrary
to public policy as contracts of adhesion.
3. Assuming further that such is valid and legal, in not finding
that petitioners substantially complied therewith.
HELD/RATIO:
1. YES, because such was sufficiently raised in the pleadings.
Ruling on Prescription EVEN without formal evidence of its
existence.
• The litigation obviously revolves on such bills of lading which
are practically the documents or contracts sued upon, hence,
they are inevitably involved and their provisions cannot be
disregarded in the determination of the relative rights of the
parties thereto.
• Respondent court correctly passed upon the matter of
prescription, since that defense was so considered and
controverted by the parties.
• Since petitioners are suing on the basis of contractual
obligations indicated in the bills of lading, such bills can be
categorized as actionable documents which under the Rules of
Court must be properly pleaded either as causes of action or
defenses, and the genuineness and due execution of which
are deemed admitted unless specifically denied under oath by
the adverse party.
• Failure to specifically deny the existence of the instruments in
question amounts to an admission.
• Judicial admissions, verbal or written, made by the parties in
the pleadings or in the course of the trial or other proceedings
in the same case are conclusive, no evidence being required to
prove the same, and cannot be contradicted unless shown to
have been made through palpable mistake or that no such
admission was made.
• In the case at bar, prescription as an affirmative defense was
seasonably raised by respondent Sweet Lines in its answer,
except that the bills of lading embodying the same were not
formally offered in evidence.
• Petitioner specifically replied to such defense in respondent’s
answer, but it failed to controvert the existence of the bills of
lading. It is thus in the nature of a negative pregnant.
Consequently, they impliedly admitted the same when they
merely assailed the validity of subject stipulations. Petitioners
MUST SPECIFICALLY DENY THE EXISTENCE OR
PRESENTATION OF EVIDENCE. This is petitioners’ reply to
respondent’s answer:
o “In connection with Pars. 14 and 15 of defendant Sweet
Lines, Inc.'s Answer, plaintiffs state that such agreements are
what the Supreme Court considers as contracts of adhesion
and, consequently, the provisions therein which are contrary to
law and public policy cannot be availed of by answering
defendant as valid defenses.”
• Petitioners failed to touch on the matter of the non-
presentation of the bills of lading. Hence it is too late in the day
to now allow the litigation to be overturned on that score, for to
do so would mean an over-indulgence in technicalities.
Petitioners' feigned ignorance of the provisions of the bills of
lading does not deserve serious attention.
2. NO, because contracts of adhesion, while frowned upon, are
not absolutely illegal.
Are the prescriptive periods void for being contracts of
adhesion?
• Petitioners posit that the alleged shorter prescriptive period
which is in the nature of a limitation on petitioners' right of
recovery is unreasonable and that SLI has the burden of
proving otherwise, citing the earlier case of Southern Lines, Inc.
vs. Court of Appeals, et al.
• BUT the validity of a contractual limitation of time for filing the
suit has generally been upheld as such stipulation merely
affects the plaintiff's remedy and does not affect the liability of
the defendant.
• In the absence of any statutory limitation and subject only to
the requirement on the reasonableness of the stipulated
limitation period, the parties to a contract of carriage may fix by
agreement a shorter time for the bringing of suit on a claim for
the loss of or damage to the shipment than that provided by
the statute of limitations.
• Such limitation is not contrary to public policy for it does not in
any way defeat the right to recover, but merely requires the
assertion of that right by action at an earlier period than would
be necessary to defeat it through the operation of the ordinary
statute of limitations.
• The fundamental reason or purpose of such a stipulation is
not to relieve the carrier from just liability, but reasonably to
inform it that the shipment has been damaged and that it is
charged with liability therefor.
3. NO, because petitioners have not substantially complied
with the conditions precedent to their right of action.
Is there substantial compliance by petitioner with regard to the
prescriptive period?
• Before an action can properly be commenced all the essential
elements of the cause of action must be in existence, that is,
the cause of action must be complete. All valid conditions
precedent to the institution of the particular action, whether
prescribed by statute, fixed by agreement of the parties or
implied by law must be performed or complied with before
commencing the action, unless the conduct of the adverse
party has been such as to prevent or waive performance or
excuse non-performance of the condition
• Stipulations in bills of lading requiring notice of claim for loss
or damage is a condition precedent. The carrier is not liable if
notice is not given in accordance with the stipulation.
• The bills of lading, are reasonable conditions precedent, they
are not limitations of action. Being conditions precedent, their
performance must precede a suit for enforcement and the
vesting of the right to file suit does not take place until the
happening of these conditions.
RULE 19
Intervention
Section 1. Who may intervene. — A person who has a
legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so
situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an
officer thereof may, with leave of court, be allowed to intervene
in the action. The court shall consider whether or not the
intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the
intervenor's rights may be fully protected in a separate
proceeding. (2[a], [b]a, R12)
Section 2. Time to intervene. — The motion to
intervene may be filed at any time before rendition of judgment
by the trial court. A copy of the pleading-in-intervention shall be
attached to the motion and served on the original parties. (n)
Section 3. Pleadings-in-intervention. — The intervenor
shall file a complaint-in-intervention if he asserts a claim
against either or all of the original parties, or an answer-in-
intervention if he unites with the defending party in resisting a
claim against the latter. (2[c]a, R12)
Section 4. Answer to complaint-in-intervention. — The
answer to the complaint-in-intervention shall be filed within
fifteen (15) days from notice of the order admitting the same,
unless a different period is fixed by the court. (2[d]a, R12)
RULE 3
Section 6. Permissive joinder of parties. — All persons
in whom or against whom any right to relief in respect to or
arising out of the same transaction or series of transactions is
alleged to exist, whether jointly, severally, or in the alternative,
may, except as otherwise provided in these Rules, join as
plaintiffs or be joined as defendants in one complaint, where
any question of law or fact common to all such plaintiffs or to
all such defendants may arise in the action; but the court may
make such orders as may be just to prevent any plaintiff or
defendant from being embarrassed or put to expense in
connection with any proceedings in which he may have no
interest. (6n)
Virra Mall Tenants Association Inc vs Virra Mall Greenhills
Association
GR No. 182902 October 5, 2011
Facts:
Ortigas & Company, Limited Partnership (Ortigas) is the owner
of the Greenhills Shopping Center (GSC). On 5 November
1975, Ortigas and Virra Realty Development Corporation (Virra
Realty) entered into a Contract of Lease (First Contract of
Lease) over a portion of the GSC. The 25-year lease was to
expire on 15 November 2000. Pursuant thereto, Virra Realty
constructed a commercial building, the Virra Mall Shopping
Center (Virra Mall), which was divided into either units for lease
or units whose leasehold rights were sold.
Thereafter, Virra Realty organized respondent Virra Mall
Greenhills Association (VMGA), an association of all the
tenants and leasehold right holders, who managed and
operated Virra Mall. In the First Contract of Lease, VMGA
assumed and was subrogated to all the rights, obligations and
liabilities of Virra Realty.
On 22 November 2000, VMGA, through its president, William
Uy (Uy), requested from Ortigas the renewal of the First
Contract of Lease.
VGMA secured two insurance policies to protect Virra Mall
against damage by fire and other causes. However, these
insurance coverages expired simultaneously with the First
Contract of Lease on 15 November 2000.[6] Subsequently, on
13 March 2001, VGMA acquired new sets of insurance policies
effective 10 January 2001 to 31 December 2001.
On 5 May 2001, Virra Mall was gutted by fire, requiring
substantial repair and restoration. VMGA thus filed an
insurance claim through the insurance broker, respondent
Winternitz Associates Insurance Company, Inc. (Winternitz).
Thereafter, the proceeds of the insurance were released to
VMGA.
On 3 September 2001, Ortigas entered into a Contract of
Lease (Second Contract of Lease) with Uy effective 2
November 2001 to 31 December 2004. On 11 September 2001,
the latter assigned and transferred to petitioner Virra Mall
Tenants Association (VMTA) all his rights and interests over
the property.
On 7 February 2003, Ortigas filed a Complaint for Specific
Performance with Damages and Prayer for Issuance of a Writ
of Preliminary Attachment against several defendants,
including herein respondents. It accused them of fraud,
misappropriation and conversion of substantial portions of the
insurance proceeds for their own personal use unrelated to the
repair and restoration of Virra Mall.
Issue:
Whether or not Virra Mall Tenant Association has cause of
action and legal interest in the litigation.
Held:
Yes. In the case at bar, VMTA, in its Complaint-in-Intervention,
explicitly laid down its cause of action as follows:
Pursuant to and by virtue of such claim, defendant VMGA and
defendant VMGA Board Members, impleaded as party
defendants herein, received, at various times, from their
insurance broker, and it is in their custody, the insurance
proceeds arising out of such claim which, as of January 8,
2003, aggregated P48.6-Million. Having failed to deliver the
said proceeds to the real beneficiary inspite of due notice and
demand, plaintiff Ortigas herein instituted the present action
against all the defendants to compel delivery of the said
insurance proceeds which are being unlawfully and illegally
withheld by all the defendant VMGA and defendant VMGA
Board Members inspite of written demands made therefor.
Worse, a portion of said insurance proceeds, aggregating
P8.6-Million had already been disbursed and misappropriated
in breach of trust and fiduciary duty. (Emphasis supplied.)
It is clear from the foregoing allegations that VMTAs purported
right is rooted in its claim that it is the real beneficiary of the
insurance proceeds, on the grounds that it had (a) facilitated
the repair and restoration of the insured infrastructure upon the
orders of Ortigas, and (b) advanced the costs thereof.
Corollarily, respondents have a duty to reimburse it for its
expenses since the insurance proceeds had already been
issued in favor of respondent VMGA, even if the latter was not
rightfully entitled thereto. Finally, the imputed act or omission
on the part of respondents that supposedly violated the right of
VMTA was respondent VMGAs refusal, despite demand, to
release the insurance proceeds it received to reimburse the
former for the expenses it had incurred in relation to the
restoration and repair of Virra Mall. Clearly, then, VMTA was
able to establish its cause of action.
VMTA was also able to show its legal interest in the matter in
litigation VMGAs insurance proceeds considering that it had
already advanced the substantial amount of P18,902,497.75
for the repair and restoration of Virra Mall. That VMTA seeks
reimbursement from Ortigas is precisely the reason why
intervention is proper. The main issue in Civil Case No. 69312
is whether Ortigas has a contractual right to the insurance
proceeds received by VMGA. Thus, the recoupment by VMTA
of the expenses it incurred in the repair of Virra Mall depends
on the success of either party in the main case. VMTA
therefore has an undeniable stake in Civil Case No. 69312 that
would warrant its intervention therein
RULE 10
Amended and Supplemental Pleadings
Section 1. Amendments in general. — Pleadings may
be amended by adding or striking out an allegation or the
name of any party, or by correcting a mistake in the name of a
party or a mistaken or inadequate allegation or description in
any other respect, so that the actual merits of the controversy
may speedily be determined, without regard to technicalities,
and in the most expeditious and inexpensive manner. (1)
Section 2. Amendments as a matter of right. — A party
may amend his pleading once as a matter of right at any time
before a responsive pleading is served or, in the case of a
reply, at any time within ten (10) days after it is served. (2a)
Section 3. Amendments by leave of court. — Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court. But such
leave may be refused if it appears to the court that the motion
was made with intent to delay. Orders of the court upon the
matters provided in this section shall be made upon motion
filed in court, and after notice to the adverse party, and an
opportunity to be heard. (3a)
Section 4. Formal amendments. — A defect in the
designation of the parties and other clearly clerical or
typographical errors may be summarily corrected by the court
at any stage of the action, at its initiative or on motion, provided
no prejudice is caused thereby to the adverse party. (4a)
Section 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by the
pleadings are tried with the express or implied consent of the
parties they shall be treated in all respects as if they had been
raised in the pleadings. Such amendment of the pleadings as
may be necessary to cause them to conform to the evidence
and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to amend
does not effect the result of the trial of these issues. If evidence
is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may
grant a continuance to enable the amendment to be made.
(5a)
Section 6. Supplemental pleadings. — Upon motion of
a party the court may, upon reasonable notice and upon such
terms as are just, permit him to serve a supplemental pleading
setting forth transactions, occurrences or events which have
happened since the date of the pleading sought to be
supplemented. The adverse party may plead thereto within ten
(10) days from notice of the order admitting the supplemental
pleading. (6a)
Section 7. Filing of amended pleadings. — When any
pleading is amended, a new copy of the entire pleading,
incorporating the amendments, which shall be indicated by
appropriate marks, shall be filed. (7a)
Section 8. Effect of amended pleadings. — An
amended pleading supersedes the pleading that it amends.
However, admissions in superseded pleadings may be
received in evidence against the pleader, and claims or
defenses alleged therein not incorporated in the amended
pleading shall be deemed waived. (n)
RULE 18
Section 7. Record of pre-trial. — The proceedings in
the pre-trial shall be recorded. Upon the termination thereof,
the court shall issue an order which shall recite in detail the
matters taken up in the conference, the action taken thereon,
the amendments allowed to the pleadings, and the agreements
or admissions made by the parties as to any of the matters
considered. Should the action proceed to trial, the order shall,
explicitly define and limit the issues to be tried. The contents of
the order shall control the subsequent course of the action,
unless modified before trial to prevent manifest injustice. (5a,
R20)
Surigao mines
Gumabay v Baralin
FACTS:
Celestina Gumabay sued defendants in the Court of First
Instance of Cagayan to recover possession of a parcel of
cornland assessed in her name. She alleged that the
defendants forcibly entered the land. The defendants moved to
dismiss the complaint on the ground that, inasmuch as it
alleged a cause of action for forcible entry, which occurred
within one year before the complaint was filed, the Court of
First Instance had no jurisdiction over the case. It should be
filed the proper inferior court. Without awaiting the resolution of
that motion, Celestina Gumabay filed an amended complaint
wherein she alleged that the defendants claimed to be the
owners of the land. She transformed her forcible entry action
into an action to quiet title. A copy of that amended complaint
was personally serve on defendants' counsel. The lower court
admitted the amended complaint, ordered the defendants to
answer it, and denied the motion to dismiss. Celestina in her
motion asked that the defendants be declared in default for not
having answered her amended complaint.
The defendants contend that the lower court erred in not
dismissing the original complaint, in admitting the amended
complaint, in assuming that it acquired jurisdiction over their
persons on the basis of the amended complaint even without
service of new summons, in declaring them in default, and in
not granting them relief from the judgment by default.
ISSUE:
Whether the lower court erred in not dismissing the original
complaint, in admitting the amended complaint, in assuming
that it acquired jurisdiction over their persons on the basis of
the amended complaint even without service of new summons,
in declaring them in default, and in not granting them relief
from the judgment by default.
RULING:
Those contentions cannot sustained. The original complaint for
forcible entry contained the basic prayer "that the plaintiff be
declared the absolute owner of the land in question". That relief
was retained in the amended complaint. The only difference
between the original and amended complaints is that the latter
contained the additional allegation that the "defendants are
now asserting and claiming title and absolute ownership over
the land in question which is adverse and against the interest
of the plaintiff".
The plaintiff explained that she had to amend her complaint in
order that the "real matter in dispute", which is "the question of
ownership", may be "determined in a single proceeding,
thereby avoiding multiplicity of suits" (16 Record on Appeal).
We hold that the trial court's order admitting the amended
complaints is in consonance with the object of the Rules of
Court to assist the parties in obtaining just, speedy and
inexpensive determination of every action and proceeding (Sec.
2, Rule 1).
To dismiss the original complaint and to require the plaintiff to
file another action to quiet title would have resulted in circuitour,
dilatory and expensive proceeding which, in the case of pauper
litigant like Celestina Gumabay, should have been avoided, as
it was a prudently avoided by the trial court.
For the same reasons, defendants' theory that new summons
shoud have been issued for the amended complaint is
untenable. The trial court had already acquired jurisdiction over
the person of the defendants when they were served with
summons on the basis of the original complaint and when they
appeared and filed a motion to dismiss.
Defendants' two lawyers were given plenty to time to answer
the amended complaint. Their failure to answer was
inexcusable. The answer attached to their petition for relief
form judgment does not contain any meritorious defense.
Therefore, to set aside the judgment by default and grant a
new trial would be an Idle ceremony. There is no probability
that defendants; evidence would justify a reversal of the
judgment by defauld. (Vda. de Yulo vs. Chua Chuco, 87 Phil.
448. 449; Gonzalez vs. Amon, 98 Phil. 587; Miranda vs.
Legaspi, 92 Phil. 290; Baquiran vs Court of Appeals, 112 Phil.
764, 771).
Remington Industrial Sales Corp v CA
May 29, 2002
Ynares-Santiago, J.
Facts
• Petitioner Remington Industrial filed a complaint for
sum of money and damagaes arising from breach of contract
against principal defendant Industrial Steels, Ltd (ISL). Ferro
Trading GMBH (Ferro) and respondent British Steel (Asia) Ltd.
Were impleaded as alternative defendants.
• ISL and British Steel sepaately moved for dismissal of
the complaint on the ground that it failed to state a cause of
action against them.
• RTC denied the motion to dismiss.
• ISL then filed its answer to the complaint.
• British Steel, on the other hand, filed a petition for
certiorari and prohibition in the CA.
• Meanwhile, Remington sought to amend its complaint
by adding certain allegations that are constitutive of a cause of
action against British Steel.
• Remington then filed a Manifestation and Motion in
the certiorari and prohibition case pending in the CA. In said
Manifestation and Motion, Remington informed te CA that it
filed a Motion to Admit Amended Complaint before the RTC.
• TRIAL COURT noted Remington’s Amended
Complaint and held the proceeding in abeyance until final
resolution by the CA of the certiorari and prohibition case.
• CA granted the writ of certiorari and ordered the trial
judge to dismiss the Remington’s complaint against British
Steel, without prejudice.
Issue
WON the CA correctly ordered the dismissal of the complaint
against British Steel, despite the fact that Remington had
exercised its right to ament the defective complaint under Sec.
2 Rule 10 of the RoC.
Held
NO. Prior to the filing of an answer, the plaintiff has the
absolute right to amend the complaint whether a new cause of
action or change in theory is introduced (Sec 2, Rule 10). The
reason is implied in Sec. 3, Rule 10, which disallows
substantial amendments without leave of court after an answer
has been served, because any material change in the
allegations contained in the complaint could prejudice the
rights of the defendant who has already set up a defense in his
answer. If the defendant has not yet filed an answer, then
changes in the complaint cannot result in a violation of his
rights since said defendant has not presented any defense that
can be altered or affected by the amendment of the complaint.
Further, the right granted to the plaintiff to amend his complaint
before an answer has been served is not precluded by the
defendant’s filing of a motion to dismiss or any other
proceeding contesting the complaint’s sufficiency. Otherwise,
the right to amend a pleading under Sec. 2, Rule 10 will be
rendered ineffectual since all a defendant has to do is to
challenge the adequacy of a complaint before he files an
answer thereto.
Moreover, amendment of pleadings is favored and should be
liberally allowed in the interest of justice and to avoid delay of
trials and multiplicity of suits.

Lastly, the fact that other defendants have filed their answers
to he complaint does not bar Remington’s right to amend its
complaint against British Steel. Where some, but not all, of the
defendants have answered, the plaintiff may still amend his
complaint against the non-answering defendant, but not as
against the other defendants who have already answered.
Dispositive
Remington’s petition for certiorari granted. CA decision set
aside. RTC ordered to admit Remington’s Amended Complaint.
Lzk v Planters
FACTS:
LZK Holdings obtained a loan from Planters Bank and secured
the same with a Real Estate Mortgage over its lot located in La
Union. On September 21, 1998, the lot was sold at a public
auction after Planters Bank extrajudicially foreclosed the real
estate mortgage thereon due to LZK Holdings' failure to pay its
loan. Planters Bank emerged as the highest bidder during the
auction sale and its certificate of sale was registered on March
16, 1999.
On April 5, 1999, LZK Holdings filed before the RTC of Makati
City, Branch 150, a complaint for annulment of extra judicial
foreclosure, mortgage contract, promissory note and damages.
LZK Holdings also prayed for the issuance of a temporary
restraining order (TRO) or writ of preliminary injunction to
enjoin the consolidation of title over the lot by Planters Bank.
Planters Bank filed an ex-parte motion for the issuance of a
writ of possession with the RTC-San Fernando.
Three (3) days before the expiration of LZK Holdings'
redemption period, the RTC-Makati issued a TRO effective for
20 days enjoining Planters Bank from consolidating its title
over the property. Then, the RTC-Makati ordered the issuance
of a writ of preliminary injunction for the same purpose but the
writ was issued only on June 20, 2000 upon LZK Holdings'
posting of a P40,000.00 bond.
In the meantime, Planters Bank succeeded in consolidating its
ownership over the property on April 24, 2000. However, the
proceedings for its ex-parte motion for the issuance of a writ of
possession was suspended by the RTC-San Fernando in an
Order in view of the TRO and writ of preliminary injunction
issued by the RTC-Makati. Planters Bank moved for
reconsideration but its motion was denied by the RTC-San
Fernando in an Order dated September 1, 2000.
Meanwhile, upon motion of LZK Holdings, the RTC-Makati
declared as null and void the consolidated title of Planters
Bank in an Order dated June 2, 2000. Such ruling was affirmed
by the CA in a Decision dated February 26, 2004 in CA-G.R.
SP No. 59327. When the matter reached the Court via G.R. No.
164563, we sustained the CA's judgment in our Resolution7
dated September 13, 2004.
Planters Bank also appealed the May 11, 2000 Order of the
RTC-San Fernando which held in abeyance the resolution of
its ex parte motion for the issuance of a writ of possession.
This time, Planters Bank was victorious. The CA granted the
appeal and annulled the assailed order of the RTC-San
Fernando. Aggrieved, LZK Holdings sought recourse with the
Court in a petition for review docketed as G.R. No. 167998. In
Our Decision dated April 27, 2007, we affirmed the CA's ruling
and decreed that Planters Bank may apply for and is entitled to
a writ of possession as the purchaser of the property in the
foreclosure sale,
Armed with the above ruling, Planters Bank filed before the
RTC-San Fernando a motion to set ex-parte hearing for the
issuance of a writ of possession. LZK Holdings opposed the
motion. In an Order dated April 2, 2008, the RTC-San
Fernando denied the opposition and set the hearing on April 14,
2008. On April 8, 2008, the RTC-San Fernando issued another
Order declaring the scheduled hearing moot and academic and
granting Planter Bank's ex-parte motion for the issuance of a
writ of possession which was filed as early as December 27,
1999. The decretal portion of the order reads:
ISSUE:
Whether or not the principle of conclusiveness of judgment, the
right of Planter's Bank to a writ of possession as adjudged in
their previous case is binding and conclusive on the parties
RULING:
Yes. The doctrine of res judicata by conclusiveness of
judgment postulates that "when a right or fact has been
judicially tried and determined by a court of competent
jurisdiction, or when an opportunity for such trial has been
given, the judgment of the court, as long as it remains
unreversed, should be conclusive upon the parties and those
in privity with them."
All the elements of the doctrine are present in this case. The
final judgment in G.R. No. 167998 was rendered by the Court
pursuant to its jurisdiction over the review of decisions and
rulings of the CA. It was a judgment on the merits of Planters
Banks's right to apply for and be issued a writ of possession.
Lastly, the parties in G.R. No. 167998 are the same parties
involved in the present case
Hence, LZK Holdings can no longer question Planter Bank's
right to a writ of possession over the subject property because
the doctrine of conclusiveness of judgment bars the relitigation
of such particular issue
Lambino v Presiding Judge
Ada v Baylon
Son v Son
MODES OF FILING
Rule 13
Section 2. Filing and service, defined. — Filing is the
act of presenting the pleading or other paper to the clerk of
court.
Service is the act of providing a party with a copy of the
pleading or paper concerned. If any party has appeared by
counsel, service upon him shall be made upon his counsel or or he has no office, then by leabing the copy, between
one of them, unless service upon the party himself is ordered the hours of eight in the morning and six in the
by the court. Where one counsel appears for several parties, evening, at the party’s or counsel’s residence, if
he shall only be entitled to one copy of any paper served upon known, with a person of sufficient age and discretion
him by the opposite side. (2a) then residing therein. (Section 6, Rule 13)
[HIERARCHY: Office first then residence]
Section 3. Manner of filing. — The filing of pleadings, - COMPLAINT is not a pleading to be served on the
appearances, motions, notices, orders, judgments and all other other party! –LOL to that quiz question
papers shall be made by presenting the original copies thereof,
plainly indicated as such, personally to the clerk of court or by
sending them by registered mail. In the first case, the clerk of SOLAR v RICAFORT
court shall endorse on the pleading the date and hour of filing.
In the second case, the date of the mailing of motions, FACTS:
pleadings, or any other papers or payments or deposits, as
shown by the post office stamp on the envelope or the registry 1. This is a case for the recovery of possession and
receipt, shall be considered as the date of their filing, payment, damages with a prayer for a writ of replevin. Private
or deposit in court. The envelope shall be attached to the respondents filed their Answer and a copy was furnished to the
record of the case. (1a) counsel of petitioner by registered mail but the pleading did not
contain and written explanation why personal service was not
Section 4. Papers required to be filed and served. — made upon petitioner-plaintiff as required by the Rules of Court.
Every judgment, resolution, order, pleading subsequent to the
complaint, written motion, notice, appearance, demand, offer of
judgment or similar papers shall be filed with the court, and
served upon the parties affected. (2a) 2. On 11 August 1997, petitioner filed a motion to expunge
the "Answer (with Counterclaims)" and to declare herein
Section 11. Priorities in modes of service and filing. — private respondents in default, 5 alleging therein that the latter
Whenever practicable, the service and filing of pleadings and did not observe the mandate of the aforementioned Section 11,
other papers shall be done personally. Except with respect to and that there was: [A]bsolutely no valid reason why
papers emanating from the court, a resort to other modes must defendant[s] should not have personally served plaintiff's . . .
be accompanied by a written explanation why the service or counsel with [a] copy of their answer [as] (t)he office of
filing was not done personally. A violation of this Rule may be defendant's (sic) counsel, Atty. Froilan Cabaltera, is just a
cause to consider the paper as not filed. (n) stone [sic] throw away from the office of [petitioner's] counsel,
with an estimate (sic) distance of about 200 meters more or
Section 12. Proof of filing. — The filing of a pleading or less.
paper shall be proved by its existence in the record of the
case. If it is not in the record, but is claimed to have been filed
personally, the filing shall be proved by the written or stamped
acknowledgment of its filing by the clerk of court on a copy of 3. Petitioner further alleged that the post office was "about
the same; if filed by registered mail, by the registry receipt and ten (10) times farther from the office of Atty. Cabaltera,"
by the affidavit of the person who did the mailing, containing a
full statement of the date and place of depositing the mail in
the post office in a sealed envelope addressed to the court,
with postage fully prepaid, and with instructions to the ISSUE: Whether or not respondent judge committed grave
postmaster to return the mail to the sender after ten (10) days abuse of discretion amounting to lack or excess of jurisdiction
if not delivered. (n) in denying petitioner's motion to expunge private respondents'
Notes: answer with counterclaims on the ground that said pleading
Pers Regist Ordin Substit Public Any was not served personally
onal ered ary ution ation
Mail Mail
Filing X X
RULING: We thus take this opportunity to clarify that under
Servic X X X X
Section 11, Rule 13 of the 1997 Rules of Civil Procedure,
e of
personal service and filing is the general rule, and resort to
Pleadi
other modes of service and filing, the exception. Henceforth,
ng
whenever personal service or filing is practicable, in light of the
Servic X X X circumstances of time, place and person, personal service or
e of filing is mandatory. Only when personal service or filing is not
Judg practicable may resort to other modes be had, which must then
ment be accompanied by a written explanation as to why personal
Servic X X X (if X service or filing was not practicable to begin with. In adjudging
e of unkno (extra the plausibility of an explanation, a court shall likewise consider
Summ wn) - the importance of the subject matter of the case or the issues
ons territo involved therein, and the prima facie merit of the pleading
rial) sought to be expunged for violation of Section 11. This Court
cannot rule otherwise, lest we allow circumvention of the
Personal Service of Pleadings & Judgment: innovation introduced by the 1997 Rules in order to obviate
- May be made by delivering personally a copy to the delay in the administration of justice.
party or his counsel, or by leaving it in his office with
his clerk or with a person having charge thereof. If no
person is found in his office, or his office is not known,
Returning, however, to the merits of this case, in view of the
proximity between the offices of opposing counsel and the
absence of any attendant explanation as to why personal
service of the answer was not effected, indubitably, private
respondents' counsel violated Section 11 of Rule 13 and the
motion to expunge was prima facie meritorious. However, the
grant or denial of said motion nevertheless remained within the
sound exercise of the trial court's discretion. Thus, as guided
by Section 6, Rule 1 of the 1997 Rules of Civil Procedure,
which ordains that the Rules shall be liberally construed in
order to promote their objective of securing a just, speedy and
inexpensive disposition of every action or proceeding, as well
as by the dictum laid down in Alonso v. Villamor, 16 Phil. 315
[1910], the trial court opted to exercise its discretion in favor of
admitting the "Answer (with Counterclaims)," instead of
expunging it from the record.
The 1997 Rules of Civil Procedure took effect only on 1 July
1997, while the questioned "Answer (with Counterclaims)" was
filed only on 8 August 1997, or on the 39th day following the
effectivity of the 1997 Rules. Hence, private respondents'
counsel may not have been fully aware of the requirements
and ramifications of Section 11, Rule 13. In fact, as pointed out
by petitioner's counsel, in another case where private
respondents' counsel was likewise opposing counsel, the latter
similarly failed to comply with Section 11
MODES OF SERVICE
Rule 13
Section 5. Modes of service. — Service of pleadings
motions, notices, orders, judgments and other papers shall be
made either personally or by mail. (3a)
Section 6. Personal service. — Service of the papers
may be made by delivering personally a copy to the party or
his counsel, or by leaving it in his office with his clerk or with a
person having charge thereof. If no person is found in his
office, or his office is not known, or he has no office, then by
leaving the copy, between the hours of eight in the morning
and six in the evening, at the party's or counsel's residence, if
known, with a person of sufficient age and discretion then
residing therein. (4a)
Section 7. Service by mail. — Service by registered
mail shall be made by depositing the copy in the post office in
a sealed envelope, plainly addressed to the party or his
counsel at his office, if known, otherwise at his residence, if
known, with postage fully prepaid, and with instructions to the
postmaster to return the mail to the sender after ten (10) days
if undelivered. If no registry service is available in the locality of
either the senders or the addressee, service may be done by
ordinary mail. (5a; Bar Matter No. 803, 17 February 1998)
Section 8. Substituted service. — If service of
pleadings, motions, notices, resolutions, orders and other
papers cannot be made under the two preceding sections, the
office and place of residence of the party or his counsel being
unknown, service may be made by delivering the copy to the
clerk of court, with proof of failure of both personal service and
service by mail. The service is complete at the time of such
delivery. (6a)
Section 9. Service of judgments, final orders, or
resolutions. — Judgments, final orders or resolutions shall be
served either personally or by registered mail. When a party
summoned by publication has failed to appear in the action,
judgments, final orders or resolutions against him shall be
served upon him also by publication at the expense of the
prevailing party. (7a)
Section 10. Completeness of service. — Personal
service is complete upon actual delivery. Service by ordinary
mail is complete upon the expiration of ten (10) days after
mailing, unless the court otherwise provides. Service by
registered mail is complete upon actual receipt by the
addressee, or after five (5) days from the date he received the
first notice of the postmaster, whichever date is earlier. (8a)
Rule 25
Section 1. Interrogatories to parties; service thereof. —
Under the same conditions specified in section 1 of Rule 23,
any party desiring to elicit material and relevant facts from any
adverse parties shall file and serve upon the latter written
interrogatories to be answered by the party served or, if the
party served is a public or private corporation or a partnership
or association, by any officer thereof competent to testify in its
behalf. (1a)
Rule 26
Section 1. Request for admission. — At any time after
issues have been joined, a party may file and serve upon any
other party may file and serve upon any other party a written
request for the admission by the latter of the genuineness of
any material and relevant document described in and exhibited
with the request or of the truth of any material and relevant
matter of fact set forth in the request. Copies of the documents
shall be delivered with the request unless copy have already
been furnished. (1a)
SERVICE OF SUMMONS
Rule 16
Section 1. Grounds. — Within the time for but before
filing the answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the following
grounds:
(c) That venue is improperly laid;
Rule 46
Section 4. Jurisdiction over person of respondent, how
acquired. — The court shall acquire jurisdiction over the
person of the respondent by the service on him of its order or
resolution indicating its initial action on the petition or by his
voluntary submission to such jurisdiction. (n)
Rule 24
Section 7. Depositions pending appeal. — If an appeal
has been taken from a judgment of a court, including the Court
of Appeals in proper cases, or before the taking of an appeal if
the time therefor has not expired, the court in which the
judgment was rendered may allow the taking of depositions of
witnesses to perpetuate their testimony for in the event of
further proceedings in the said court. In such case the party
who desires to perpetuate the testimony may make a motion in
the said court for leave to take the depositions, upon the same
notice and service thereof as if the action was pending therein.
The motion shall state (a) the names and addresses of the
persons to be examined and the substance of the testimony
which he expects to elicit from each, and (b) the reason for
perpetuating their testimony. If the court finds that the
perpetuation of the testimony is proper to avoid a failure or In personam - binding against the parties only (can be done
delay of justice, it may make an order allowing the deposition extraterritorially for a resident merely abroad)
to be taken, and thereupon the depositions may be taken and
used in the same manner and under the same conditions as Action Real or In Prescriptive
are prescribed in these Rules for depositions taken in pending Personal Personam, Period
actions. (7a, R134) Action In Rem,
Quasi In
Rem
Modes of Service (Rule 14) Publiciana Real In Personam 10
1. Personal Reinvindicatoria Real In Personam 10/30/imp
Section 6. Service in person on defendant. — Reconveyance Real In Personam 10
Whenever practicable, the summons shall be served FEUD Real In Personam 1
by handling a copy thereof to the defendant in person, Quieting of Title Real Quasi In Imp
or, if he refuses to receive and sign for it, by tendering Rem
it to him. (7a) Forclosure Real Quasi In 10
2. Substituted Rem
Section 7. Substituted service. — If, for Land Real In Rem Imp
justifiable causes, the defendant cannot be served Registration
within a reasonable time as provided in the preceding Injunction Personal In Personam
section, service may be effected (a) by leaving copies Specific Personal In Personam
of the summons at the defendant's residence with Performance,
some person of suitable age and discretion then Rescission,
residing therein, or (b) by leaving the copies at Damages
defendant's office or regular place of business with Probate of a Will Personal In Rem
some competent person in charge thereof. (8a)
Notes:
Personal Service of Summons: GOMEZ v CA
- Must be personally served by handing a copy thereof
to the defendant in person, or, if he refuses to receive FACTS:
and sign for it, by tendering it to him. (Section 6, Rule
14) Sometime in 1975, spouses Jesus and Caridad Trocino
mortgaged 2 parcels of land to Dr. Yujuico in Cebu City. The
Substituted Service of Pleadings: mortgage was subsequently foreclosed. Respondent-spouses
- May be made by delivering the copy to the clerk of Trocino sold the lands to petitioner- spouses, who in turn
court. (Section 7, Rule 13) redeemed the lands from the mortgagee. However, the
spouses Trocino refused to deliver the titles to petitioner-
Substituted Service of Summons: spouses. Thus, spouses Gomez sued spouses Trocino for
- (a) by leaving copies of summons at the defendant’s delivery of the titles. The husband Trocino died before the suit
residence with some person of suitable age and was filed, thus his children, including Adolfo Trocino and
discretion then residing therein or (b) by leaving Mariano Trocino, were impleaded in the suit. Summons was
copies at the defendant’s office or regular place of served, and it was only received by Caridad Trocino in behalf
business with some competent person in charge of the children. The trial court rendered judgment against the
thereof. (Section 7, Rule 14) [NO HIERARCHY] spouses Trocino and their heirs. Adolfo and Mariano Trocino
petitioned for the annulment of the judgment of the RTC with
The courts acquire jurisdiction over the defendants, in a civil the CA, alleging that no jurisdiction was acquired over them. At
case, through the service of summons upon them in the that time, Adolfo Trocino was a resident of Ohio, USA while
manner required by law or through their voluntary appearance Mariano Trocino was a resident of Talibon, Bohol, and both
in court and their submission to its authority. The proper were not found in Cebu City at the time summons was served.
service of summons differs depending on the nature of the civil
case instituted: whether in personam, in rem or quasi in rem. ISSUES:

In personam – are those actions brought against a
person on the bases of his personal liability
In rem – are actions against the thing itself instead of
against the person
Quasi in rem – where an individual is named as
defendant and the purpose of the proceeding is to
subject his interest in a property to the obligation or
loan burdening the property.
Extraterritorial service of summons applies only where the
action is in rem or quasi in rem (because they do not need to
acquire over the person), but not if an action is in personam.
In rem - binding against all persons
Quasi In Rem - binding against the property (these actions do
not require one to follow a hierarchy - can avail of personal
service or publication or any)
1. What was the nature of the complaint, upon which the
manner of the service of summons should be based?
The action was an action in personam. While it is a real action
because it affects title to or possession of land, it does not
automatically follow that the action is one in rem. In a personal
action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract or the recovery of damages. A real
action is one affecting title to real property or for the recovery
of possession, or for partition or condemnation of, or
foreclosure of a mortgage on real property. An action in
personam is an action against a person on the basis of his
personal liability, while an action in rem is an action against the
thing itself, instead of against the person. The present case is
an action in personam, because it is an action against persons,
on the basis of their personal liability of non-delivery of titles.
Thus, personal service of summons upon the private
respondents is essential in order for the court to acquire
jurisdiction over their persons.
2. Was there a valid service of summons? 3. If personal
service were impossible to comply, what should have been
done?
There was none. In actions in personam, summons on the
defendant must be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering
it to him. In substituted service, it is mandated that the fact of
impossibility of personal service should be explained in the
proof of service. Where the defendant in an action in personam
is a non-resident who does not voluntarily submit himself to the
authority of the court, personal service of summons within the
State is essential to acquire jurisdiction over his person. An
exception was accorded in Gemperle v. Schenker wherein
service of summons through the non-resident’s wife, who was
a resident of the Philippines, was held valid, as the latter was
his representative and attorney-in-fact in a prior civil case filed
by the non-resident, and the second case was merely an
offshoot of the first case. In an action in rem or quasi in rem,
jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided the
court acquires jurisdiction over the res, although summons
must be served upon the defendant for purposes of due
process. Thus, where the defendant is a non-resident and not
found in the Philippines, and: 1. the action affects the personal
status of the plaintiff; 2. the action relates to, or the subject
matter of which is property in the Philippines in which the
defendant has or claims a lien or interest; 3. the action seeks
the exclusion of the defendant from any interest in the property
located in the Philippines; or 4. the property of the defendant
has been attached in the Philippines.
PHILAM LIFE V. BREVA,
- respondent Milagros Morales filed a complaint for damages
and reimbursement of insurance premiums. Complaint stated
that petitioner could be served with summons and other court
processes thru its Manager at its branch office in Davao City
- Summons served upon Philam’s Davao office and received
by Insurance Service Officer
- Philam filed MTD otg of lack of jurisdiction over its person due
to improper service of summons. The employee who received
was not among those enumerated in Rule 14, RoC
- Morales filed amended complaint alleging that summons may
also be served at Philam’s principal office in Manila
- RTC denied MTD and directed service of alias summons in
Manila (improper service of summons not ground for dismissal
because case is still in its initial stage)
- CA held that the service of alias summons vested the RTC
with jurisdiction over the person of petitioner
HELD:
- An alias summons may be served in case of wrongful service
of summons
- ITC, complaint was amended after the petitioner filed the
motion to dismiss.
- Where the defendant has already been served summons on
the original complaint, the amended complaint may be served
upon him without need of another summons. But if no
summons yet been validly served on the defendant, new
summons for the amended complaint must be served on him
- ITC, since at the time the complaint was amended no
summons had been properly served on the petitioner and it
had not yet appeared in court, new summons should have
been issued on the amended complaint. SO, the TC should
have ordered the service of an original summons, not an alias
summons (which is just a continuation of an original summons)
- Nonetheless, alias vs. original = mere nomenclature
MANOTOC V. COURT OF APPEALS
Facts:
Mrs. Agapita Trajano sought the enforcement of a foreign
judgment rendered by the US District Court of Hawaii against
Ma. Imelda M. Manotoc (Imee Marcos) for the wrongful death
of Mr. Archimedes Trajano committed by military intelligence in
the Philippines allegedly working for Manotoc.
The RTC issued summons for Manotoc addressed at
Alexandra Homes, Pasig. It was served on a Macky dela Cruz
described as a caretaker of her unit. Manotoc failed to file her
answer and was declared in default.
On October 1993, manotoc filed a motion to dismiss on the
ground of lack of jurisdiction over her person, stating that she
is not a resident of the said condo and that she does not hold
office there, as well as that Macky dela Cruz is not her
representative or employee. Thus no valid service was made.
Further, she states that she is a resident of Singapore.
On October 1994, the RTC denied the motion. On December
1994, denied her MR for lack of merit.
Manotoc filed a petition for certiorari and prohibition with the
CA on January 1995, that was denied on March 1997, and the
MR denied on April 1997. The CA ruled that:
1) As per findings of the trial court, the residence of
Manotoc was indeed at Alexandra Homes.
2) The disembarkation/embarkation cord and
certification were hearsay. It rejected a proof of her residency
in Singapore based on her passport in which two pages were
withheld.
Issue:
Whether there was valid substituted service.
Held:
No.
In actions strictly ‘in perosnam’jurisdiction over the person of
the defendant is mandatory and can be complied with valid
service of summons.
If defendant cannot be served, for excusable reason, within a
reasonable time, substituted service can be resorted to.
It is extraordinary in character and a derogation of the usual
method of service thus rules for such must be faithfully
complied with.
The requirements of valid substituted service if there is
impossibility of prompt personal service which is 15-30 days for
the sheriff are:
1) By leaving copies of summons at defendant’s
residence with a person of suitable age and discretion residing
therein or by leaving copies at the defendant’s office or regular
place of business with some competent person in charge.
2) The sheriff must narrate in specific details how
service in person became impossible.
3) The attempt must be extraordinary and at least three
times. The person of suitable age and discretion must be at
least 18 years old, able to read the summons written in English,
and must be with confidential relation to defendant. A
competent person in charge can be the president or manager.
The substituted service was invalid because the sheriff did not
comply with the requirements. Macky dela Cruz was not a
representative of Manotoc. Therefore, since there was no valid
service of summons, there was no jurisdiction acquired. The
RTC’s decision is null and void.
3. Publication
Section 14. Service upon defendant whose
identity or whereabouts are unknown. — In any action
where the defendant is designated as an unknown
owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected
upon him by publication in a newspaper of general
circulation and in such places and for such time as
the court may order. (16a)
RULE 57
Section 1. Grounds upon which attachment
may issue. — At the commencement of the action or
at any time before entry of judgment, a plaintiff or any
proper party may have the property of the adverse
party attached as security for the satisfaction of any
judgment that may be recovered in the following
cases:
(f) In an action against a party who does not
reside and is not found in the Philippines, or on whom
summons may be served by publication. (1a)
4. Extraterritorial
Section 12. Service upon foreign private
juridical entities. — When the defendant is a foreign
private juridical entity which has transacted business
in the Philippines, service may be made on its
resident agent designated in accordance with law for
that purpose, or, if there be no such agent, on the
government official designated by law to that effect, or
on any of its officers or agents within the Philippines.
(14a)
Section 15. Extraterritorial service. — When the
defendant does not reside and is not found in the
Philippines, and the action affects the personal status
of the plaintiff or relates to, or the subject of which is,
property within the Philippines, in which the defendant
has or claims a lien or interest, actual or contingent,
or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest
therein, or the property of the defendant has been
attached within the Philippines, service may, by leave
of court, be effected out of the Philippines by personal
service as under section 6; or by publication in a
newspaper of general circulation in such places and
for such time as the court may order, in which case a
copy of the summons and order of the court shall be
sent by registered mail to the last known address of
the defendant, or in any other manner the court may
deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the
defendant must answer. (17a)
Section 16. Residents temporarily out of the
Philippines. — When any action is commenced
against a defendant who ordinarily resides within the
Philippines, but who is temporarily out of it, service
may, by leave of court, be also effected out of the
Philippines, as under the preceding section. (18a)
RULE 57
Section 1. Grounds upon which attachment
may issue. — At the commencement of the action or
at any time before entry of judgment, a plaintiff or any
proper party may have the property of the adverse
party attached as security for the satisfaction of any
judgment that may be recovered in the following
cases:
(f) In an action against a party who does not
reside and is not found in the Philippines, or on whom
summons may be served by publication. (1a)
Foreign Corporations (Corporation Code)
Sec. 123. Definition and rights of foreign corporations. - For the
purposes of this Code, a foreign corporation is one formed,
organized or existing under any laws other than those of the
Philippines and whose laws allow Filipino citizens and
corporations to do business in its own country or state. It shall
have the right to transact business in the Philippines after it
shall have obtained a license to transact business in this
country in accordance with this Code and a certificate of
authority from the appropriate government agency. (n)
Sec. 128. Resident agent; service of process. - The Securities
and Exchange Commission shall require as a condition
precedent to the issuance of the license to transact business in
the Philippines by any foreign corporation that such corporation
file with the Securities and Exchange Commission a written
power of attorney designating some person who must be a
resident of the Philippines, on whom any summons and other
legal processes may be served in all actions or other legal
proceedings against such corporation, and consenting that
service upon such resident agent shall be admitted and held as
valid as if served upon the duly authorized officers of the
foreign corporation at its home office. Any such foreign
corporation shall likewise execute and file with the Securities
and Exchange Commission an agreement or stipulation,
executed by the proper authorities of said corporation, in form
and substance as follows:
"The (name of foreign corporation) does hereby stipulate and
agree, in consideration of its being granted by the Securities
and Exchange Commission a license to transact business in
the Philippines, that if at any time said corporation shall cease
to transact business in the Philippines, or shall be without any
resident agent in the Philippines on whom any summons or
other legal processes may be served, then in any action or
proceeding arising out of any business or transaction which
occurred in the Philippines, service of any summons or other
legal process may be made upon the Securities and Exchange
Commission and that such service shall have the same force
and effect as if made upon the duly-authorized officers of the
corporation at its home office."

Whenever such service of summons or other process shall be

made upon the Securities and Exchange Commission, the
Commission shall, within ten (10) days thereafter, transmit by
mail a copy of such summons or other legal process to the
corporation at its home or principal office. The sending of such
copy by the Commission shall be necessary part of and shall
complete such service. All expenses incurred by the
Commission for such service shall be paid in advance by the
party at whose instance the service is made.

In case of a change of address of the resident agent, it shall be

his or its duty to immediately notify in writing the Securities and
Exchange Commission of the new address. (72a; and n)

Sec. 133. Doing business without a license. - No foreign

corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to
maintain or intervene in any action, suit or proceeding in any
court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause
of action recognized under Philippine laws. (69a)

AM No. 11-3-6-SC; new rule on service of summons on foreign

juridical entities.

Section 12, Rule 14 of the Rules of Court is hereby amended

to read as follows:

"SEC. 12. Service upon foreign private juridical entity.

—
When the defendant is a foreign private juridical entity
which has transacted business in the Philippines,
service may be made on its resident agent designated
in accordance with law for that purpose, or, i f there
be no such agent, on the government official
designated by law to that effect, or on any of its
officers or agents within the Philippines.

If the foreign private juridical entity is not registered in

the Philippines or has no resident agent, service may,
with leave of court, be effected out of the Philippines
through any of the following means:

a) By personal service coursed through the

appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;

b) By publication once in a newspaper of general

circulation in the country where the defendant may be
found and by serving a copy of the summons and the
court order by-registered mail at the last known
address of the defendant;

c) By facsimile or any recognized electronic means

that could generate proof of service; or

d) B y such other means as the court may in its

discretion direct."

This rule shall take effect fifteen (15) days after

publication in a newspaper of general circulation in
the Philippines.